Cryptocurrency adoption is on a significant upsurge in Africa. In recent times, the continent has seen much higher levels of crypto ownership and activity. Regulation and trading have also jumped significantly, with governments and private organizations looking to cash in on the crypto craze and make a more enabling environment.
In a recent report, Arcane Research found that countries like Nigeria, South Africa, Ghana, and Kenya are part of the top countries where the Google search tag “Bitcoin” pops up. The report, titled “The State of Crypto in Africa,” highlights the continent as one of the most promising regions for crypto adoption – if not the most promising, hands down.
As Arcane Research explained, African countries share significant trends and similarities that allow crypto to survive. This is despite the continent’s incredible diversity. Economic issues like currency volatility and skyrocketing inflation make crypto a perfect safety and development source for many African countries.
At the same time, Bitcoin isn’t the only cryptocurrency making significant waves on the continent. Other names are finding use in lesser-known countries, all looking to ensure that the continent doesn’t miss out on the huge crypto revolution that has taken the entire world by storm.
With this continent now vibrant, it is worth understanding what cryptocurrencies – especially Bitcoin – can do to help Africans live better.
Simple Investments in a Time of Crisis
The first and most significant solution for many comes from the investment angle. Similar to other continents, Bitcoin has become an opportunity for Africans to grow their wealth in a simple, effective manner.
Bitcoin performed better than any other investment asset last year. Data from CoinMarketCap shows that the leading cryptocurrency started the year trading at $7,386. It ended the year trading at over $29,000, providing gains of over 300 percent. No stock or investment product on the entire African continent provided such returns.
2020 was particularly challenging, with currencies taking a considerable tumble due to the coronavirus. Last February, the International Monetary Fund (IMF) cut its economic growth forecast for Nigeria, citing the drop in oil prices and lack of demand from top importers like China. The country, which remains Africa’s largest economy, was advised to diversify its market from oil. This resource still drives about 94 percent of all revenues to the government to this day.
Several other markets saw significant drops due to the coronavirus and bans placed on product movements. In the face of an economic crunch, citizens could essentially move to Bitcoin and be safe.
Ease of Doing Business
Beyond the investment benefit, Bitcoin also provides a means for citizens to access the dollar. In September, Reuters shared the story of Abolaji Odunjo, a Lagos-based businessman who dealt mobile phones.
Per the report, Odunjo’s business depends on phones and accessories, which he gets from the United Arab Emirates and China. His suppliers eventually urged him to pay them in cryptocurrencies, which they believed to be much faster and convenient.
As Odunjo explained, the move helped him to grow his profits. He could make significant savings on money transfers, and he didn’t need to pay extra for buying the dollar at a bank or a local bureau de change.
“Bitcoin helped to protect my business against the currency devaluation, and enabled me to grow at the same time. You don’t have to pay charges, you don’t have to buy dollars,” Odunjo said.
Citing data from Chainalysis, Reuters reported that monthly crypto transfers under $10,000 to and from Africa had amounted to $316 million in June 2020 – a 55 percent jump in a year. Much of the activity reportedly took place in Nigeria, South Africa, and Ghana.
This benefit is one which, sadly, not many businesses have been able to capitalize on. However, it is a substantial one. Cross-border transactions across banks and other financial services in Africa can take days to get completed, and they cost quite a pretty penny too. With Bitcoin, work gets much faster, and transactions can be handled more conveniently.
Banking the Unbanked
There is also the benefit of improving the proliferation of banking services across the continent. Data from Statista shows that about 465 million Africans will have bank accounts in Africa by next year. Considering that the continent has about 1.31 billion people, the level of banking penetration is yet to reach impressive levels.
The banking problem isn’t just a standalone issue. Banking services require internet and infrastructural development. Many parts across Africa have manageable internet and mobile connection, but banks can still not establish themselves because of the low infrastructural development.
With Bitcoin, the unbanked Africans have a bank that needs no physical structures. Bitcoin allows them to make easy and quick transactions without spending so much time and effort at physical banks. In a world where everyone is trying to stay safe and avoid crowds, this benefit is even more critical.
There is a significant probability that the continent will see even greater adoption levels going forward. With governments also becoming more aware of digital assets, policy proposals will be more critical now than ever.