Last week, FTX Crypto Derivatives Exchange announced a partnership with AZA Finance, an emerging market financial services company. The deal will allow FTX to leverage AZA’s footprint across sub-Saharan Africa to roll out African and digital currency trading pairs; make it easier to deposit and pay out in local currencies as well as cryptocurrency; and expand the adoption of Web3 across the continent.
“Over the last nine years, AZA Finance has built a regulatory compliant business in Africa, over stable and reliant infrastructure,” Elizabeth Rossiello, CEO and founder of AZA Finance tells The Africa Report. “Our partnership with FTX means that they will be able [to] plug into our existing network, accelerating their expansion across the continent and provid[ing] access to a new generation of investors looking to access a new generation of assets.”
Founded in Kenya in 2013, AZA Finance has grown from a currency exchange platform to one that offers payments, treasury and FX services in over 115 markets worldwide, with a physical presence in 10 African countries.
Headquartered in the Bahamas, FTX is a centralised cryptocurrency exchange, which specialises in derivatives and leveraged products and is mostly used to trade cryptocurrencies. In January this year, FTX launched its own $2bn venture capital fund to support businesses pushing blockchain and Web3 adoption in fintech, healthcare, gaming and other industries.
Through FTX, African retail and institutional investors will be able to tokenise a variety of assets to trade, including non-fungible tokens (NFTs)
Though there is no solid definition of Web3, it is loosely described as the next iteration of the internet – one that uses blockchain technology, artificial intelligence and machine learning to share data in a much more decentralised way. As such, proponents of Web3 believe that a decentralised platform will move power away from large corporations to the individual, who will have ownership of their data within the new framework.
African retail investors have been largely excluded from investing and trading in international markets due to the illiquid and volatile nature of so-called ‘exotic’ currencies. As such, investors planning to access alternative assets such as cryptocurrencies, and equity markets more broadly, have been forced to invest offshore.
This has limited the growth of alternative asset classes in Africa and exacerbated illiquidity associated with local currencies. However, through its partnership with AZA Finance, FTX hopes to provide retail and institutional users with immediate access to cryptocurrencies and digital assets in direct exchange for local currency. Rossiello says “this goes way beyond future and spot trading”.
“Through FTX, African retail and institutional investors will be able to tokenise a variety of assets to trade, including non-fungible tokens (NFTs), on the platform. […] not only will African investors be able to access offshore alternative investments, but international investors will also be able to invest directly in African companies and individuals as well,” she says
‘2% of the global value’
African countries only represent 2% of the global value of cryptocurrency received and sent globally, according to research compiled by Brookings, but the potential for growth is huge given the continent’s track record around digital adoption, sparked by the growth of mobile money in Kenya.
More recently, several central banks across the continent have either issued or are piloting Central Bank Digital Currencies (CBDCs), which will leverage existing mobile money infrastructure and boost financial inclusion. Though the CBDCs will be subject to national and regional currency regulation, it does highlight the continent’s appetite for digital assets much more broadly.
“Central banks are looking at CBDCs to keep up with financial innovation and the adoption of cryptocurrencies,” says Rossiello at AZA Finance. “For us, anything that supports faster and cheaper settlement in Africa, and reduces barriers to entry, will be welcome.”
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options