Source: Adobe/Vitoria Holdings LLC
Cryptocurrency is gaining popularity fast in Africa, where a new report claims young people are disillusioned with the conventional financial system and are poised to turn to bitcoin (BTC) and altcoins to power their financial future.
The report mentions a number of what it calls catalysts that it claims are now driving bitcoin and altcoin adoption in Africa, including the below:
- Capital control: governments often impose restrictions on foreign exchange to defend their currencies from losing value
- Political instability and inflation: growing uncertainty and lack of faith in state-run systems is driving people away from conventional finance, while people are losing their confidence in conventional fiats
- Mobile finance: Existing mobile money transfer solutions are becoming increasingly popular. Kenyan telecoms provider Safaricom’s M-Pesa remittance platform handles some 11 billion transactions per year (and has already won the support of Visa). As such, mobile finance is already becoming second nature to many Africans
- Mobile coverage: although this is still way behind the global average, smartphone ownership is on the up, with 67% of all phone connections expected to be smart devices by 2025
- Demographics: As younger people are thought to be more likely to foray into crypto, it may be worth noting that the continent’s average age is 18, with 97% of the Sub-Saharan region aged under 65
However, it is not all rainbows and ice cream for crypto in Africa, per the report’s authors, who make note of a number of what they call “important obstacles” to crypto progress. These include the following:
- Internet coverage: Less than 40% of the continent has “some form of” coverage, and some countries have internet penetration rates that are lower than 10% – a fact that has led M-Pesa and other providers to pursue SMS-powered remittance solutions
- Electricity coverage: In Sub-Saharan Africa, 57% of the population lacks electricity access – meaning that even SMS-powered crypto solutions would be of little help
- Competition from mobile money providers: M-Pesa and competitors already have a major foothold in the market, and could be hard to dislodge
- Regulatory resistance: 60% of African nations have no cryptocurrency-related legislation and have yet to clarify their stances, while many North African nations, such as Algeria, are “hostile” to crypto. Some Muslim nations have issued bans on crypto, claiming that using bitcoin and the rest may represent violations of Sharia Law
The Naspers-backed exchange has stated that it is in talks about expanding in Kenya and Ghana to extend its African footprint, with South African media outlet Tech Central recently quoting Luno’s general manager Marius Reitz as stating,
“It’s markets we have a keen interest in, and Ghana and Kenya are high on our list.”
The company has also released a trailer for a video project about the spread of bitcoin and crypto-powered finance in South Africa and beyond.
Meanwhile, peer-to-peer (P2P) Bitcoin marketplace, Paxful, said earlier this year that the world has much to learn from Africa about the future of the crypto-economy and that 2020 will be a landmark year for the African crypto and blockchain industry. In February, the company hosted over three million wallets, 45% of which were from Africa. African trading volume on the Paxful platform grew by over 57% in 2019, it added.