Nigerian food commodities exchange AFEX is seeking funding for expansion in east Africa as the Russia-Ukraine war sharpens regional food insecurity, ... managing director Tabitha Njuguna tells The Africa Report.
In the last 30 days, users based in sub-Saharan Africa acquired the equivalent of about $80m worth of cryptocurrencies, according to UsefulTulips, a company specialising in analysing this market.
This represents a 19% increase on the monthly average of $67m over the past 12 months and more than the $79m that North America acquired.
From 6 to 12 September, sub-Saharan users acquired the equivalent of $20.5m, compared to $20m in North America.
Sub-Saharan acquisitions are 50% higher than Asia-Pacific volumes, three times that of Latin America and twice that of all other countries in the world combined.
The previously unnoticed sub-Saharan breakthrough reflects these new digital currencies’ increased popularity on the continent.
In 2021, 42% of Nigerians surveyed by the specialist website Statista said that they had already used cryptocurrencies, compared to 8% in the US, 7% in China and 5% in France.
Kenya, world champion
Cryptocurrencies are not only popular in Nigeria. Although Nigerians own the most cryptocurrencies by volume, Kenyans are proportionally the fondest of them on the continent.
In fact, 8.5% of Kenya’s population owns a cryptocurrency account, compared to 7.1% in South Africa and 6.3% in Nigeria, according to Singaporean specialist firm Triple A.
According to estimates by Chain Analysis, another cryptocurrency specialist, Kenya’s cryptocurrency adoption rate is higher than that of the US and China. As a result, Kenya ranks 5th in a long list of 154 countries.
The East African country is also the world champion when it comes to the amount of peer-to-peer (P2P) cryptocurrency trading that takes place. More emerging countries (Central and South Asia, Latin America and Africa) engage in P2P exchanges than developed ones.
As a matter of fact, this form of transaction, which does not require any intervention from a third party or state authority, offers more leeway to individuals in terms of the price and exchange rate.
Defying the ban
Even though the governments of some states, such as Morocco, Namibia, Algeria and Zimbabwe have banned the use of cryptocurrencies, these countries’ residents continue to acquire them.
2% of Morocco’s population holds digital currencies, thus ranking it among Africa’s top 5 countries.
Moroccan interest in the currency has been soaring and peaked in 2021. According to Jukka Blomberg, the marketing director of LocalBitcoins (a Helsinki-based marketplace), February 2021 “was the platform’s best month ever in Morocco in terms of transaction volumes.”
More than $900,000 worth of bitcoins were traded during that month and the platform saw a 30% increase in registrations between 2019 and 2020.
Ambitions and obstacles
Further south, Togo has openly discussed employing cryptocurrencies and blockchain in its National Development Plan 2018-2022.
Indeed, as the plan states, Lomé “intends to create the necessary conditions to become a regional financial hub, to bolster its economy by improving access to its financial services and innovate this area.”
According to Donaldson Nukunu Sackey, a Togolese footballer and businessman, cryptocurrency “could be a blessing for African countries, as it could help governments overcome major obstacles to development, such as high inflation, embezzlement and corruption.”
His confidence in the technology has even led him to create his own cryptocurrency, the Timeless Capital Coin. He feels that “he is providing a service to Togo by launching a dedicated cryptocurrency in the country.”
Despite his ambitions, Togo is facing some obstacles, notably from the Banque Centrale des États d’Afrique de l’Ouest (BCEAO), which feels that this currency is “uncontrollable and irresponsible.”
In America and Northern Europe, these virtual currencies are mainly seen as institutional and professional investments.
On the other hand, in the countries outside those regions, individuals are more likely to invest in them. People are turning to cryptocurrencies because they prefer digital channels to traditional forms of banking, as they have lost confidence in public institutions.
The main reasons why some people are favouring cryptocurrency is because it allows them to protect their income and savings should their local currency fall in value, they can buy and sell goods and services and be less impacted by inflation. But above all, they can safely send and receive funds from abroad at a lower cost.
In fact, as the World Bank points out, it is much more expensive to send money to sub-Saharan Africa than it is anywhere else in the world.
“The average rate for sending $200 was 8.2% in the fourth quarter of 2020,” compared to about 3% on crypto networks.
“Although digital currency has been created and flourished in some of the world’s richest economies, I believe it can take African economies to the next level after decades of struggling with traditional banking systems,” says Shay Datika, founder and president of INX Digital Assets, a blockchain-based trading platform.
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