Is Crypto the Future Regional Currency of Africa?
By Ivan Dikalenko 648 1 May 2023
Even without access to the latest gadgets and a surplus of money, cryptocurrency enthusiasts from Africa are eager to trade stablecoins and bitcoins. And they're doing a good job of it.
Why Africa is embracing cryptocurrency
According to the International Monetary Fund, the population of Africa is set to double from 1.3 billion to 2.6 billion by 2050. To put it in perspective, every third young person between the ages of 15 and 35 in the world could be African by that time. Additionally, within two years, every sixth internet user will access the internet from the African continent.
Furthermore, the World Bank reports that approximately 57% of Africans lack access to formal financial services, such as opening a bank account, obtaining a credit line, or depositing funds. As a result, experts believe that young Africans with internet access but no access to traditional banking services will eventually turn to cryptocurrency.
Africa is a sleeping giant in the crypto world
Blockchain technology has the potential to revolutionize the African economy. Cryptocurrencies can transform the country’s financial sector by enabling peer-to-peer payments and money transfers, keeping liquidity in digital wallets, providing smart contracts for lending and borrowing, and offering basic financial services through decentralized apps.
Bitcoin and stablecoins are the two primary drivers of cryptocurrency adoption in Africa. Last year, Bitcoin became a legal payment method in the Central African Republic, and similar moves are expected in other African countries. Local crypto companies believe Bitcoin could eventually become a regional currency or even a standard across the African Union. Others have high hopes for stablecoins, despite the recent depegging of USDC. This is because Bitcoin might be too expensive for people working in Africa on minimum wages.
Mass crypto adoption in Africa: the first steps
More and more people in Africa are embracing alternative payment systems. One such example is M-Pesa, a service developed by Kenyan mobile operators in 2007. M-Pesa allows users to make payments, loans, and deposits without opening a bank account or connecting to the internet. Similarly, MTN Momo, a mobile money service, has become increasingly popular in Ghana. Around 30% of Africans in countries south of the Sahara use mobile money.
This growing interest in cryptocurrencies has given rise to startups like Machankura which means "money" in local slang. It enables users from nine African countries, including Nigeria, Tanzania, and Kenya, to conduct Bitcoin transactions without internet access or even a smartphone. While basic button phones are still widely used in Africa, Machankura has developed technology that caters to this user base. Users can now open digital wallets and buy or sell BTC using simple text codes.
People in Africa are eager to use cryptocurrencies as a currency. Despite the focus on Asia as the future of the crypto market, Africa has the potential to make an even bigger impact with the help of the global crypto industry.