With cryptocurrencies, “there is a lot of money to be made and this appeals to young Africans”

according to Global Crypto Adoption Index Published by blockchain data analytics platform Chainalyis, in 2021, six African countries namely Kenya (5), Nigeria (6), Togo (9) South Africa (16), Ghana (17) and Tanzania (19) were among the world’s top 20 countries With the highest adoption of cryptocurrencies. In September 2021, the equivalent of $20.7 million in cryptocurrency was acquired on LocalBitcoins and Paxful platforms from sub-Saharan Africa, putting the region ahead of North America ($20.3 million), Asia ($13.6 million) and Western Europe ($5.7 million). dollars) according to the specialist site UsefulTulips. In April 2022, a historic vote made the low-income Central African Republic the second country in the world after El Salvador to choose Bitcoin as its official currency.

Attractive speculation

This cryptocurrency penetration in this continent where less than half of the adult population still has access to formal financial services can be explained by several factors. Above all, the increasing attraction of the speculative world, which is so far inaccessible on the continent. “We didn’t have a place at the bis table but with cryptocurrency everyone on Earth is eating. There is a lot of money to be made and it attracts young AfricansThis enthusiasm is attested to this enthusiasm by one of the Ethiopian entrepreneurs active in cryptomarketing. The multiplication of cryptocurrency exchanges on the continent testifies to this enthusiasm. Well-established platforms such as China’s Binance or Londoner Luno now have offices in Africa as well as several African platforms (Valr in South Africa) that have emerged Africa, NairaEx in Nigeria or BitPesa in Kenya, for example) in recent years.

The proliferation of peer-to-peer cryptocurrency exchanges is another determining factor in the adoption of these currencies on the continent. In fact, these platforms offer a less expensive alternative to traditional solutions for transferring money between individuals internationally. According to the World Bank, remittances from workers residing in sub-Saharan Africa to foreign countries amounted to nearly $7.7 billion in 2019, while remittances from workers abroad increased, reaching nearly $50 billion. These transfers are mainly operated via companies such as Western Union, MoneyGram or Ria, whose fees vary depending on several criteria such as the country of sending, destination, payment methods (cash or bank transfer) or the speed of preparation of funds available. According to the magazine African youthThese costs, sometimes confiscated, can be up to 20% of the amount transferred. With relatively low transaction costs (less than 1% on Binance, for example), cryptocurrency exchanges are positioned as a serious competitor to traditional international remittance solutions.

Finally, cryptocurrencies, which are sometimes more accessible than the US dollar, especially for households without bank accounts but with a smartphone and an Internet connection, can play the role of a safe haven in order to protect savings from the double-digit inflation raging in some countries on the continent.

different reactions

Faced with this cryptocurrency penetration in Africa, it appears that countries are currently advancing in scattered ranks. Reactions range from its outright, but ineffective, ban in Morocco, Egypt and Algeria, to its formalization in the Central African Republic, to a range of shades of gray areas.

On the part of the players in the finance and banking sector, the wait-and-see attitude appears to prevail. “It is a parallel industry run by non-banking structures and we cannot operate on its territory. In fact, we don’t include it in our plans‘, an official at the African Ecobank who I questioned about this question revealed to me.

If the emergence of cryptocurrencies portends major changes in our habits of holding money, financial transactions, savings, and in general in our relationship with money, then the rapidly increasing adoption of these currencies in Africa leads one to believe, more than anywhere else, this paradigm shift will reshuffle the cards. cash on this young continent. It is therefore of paramount importance that this inevitable transition be accompanied by measures to regulate and protect crypto enthusiasts in Africa.

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