The infusion of crypto into Africa’s banking sector is something worth looking into. Despite its nascent stage, the digital currency ecosystem has left its impact on the global financial network.
While Africa’s banking is still largely cash-based, there has been an increase in crypto use within the region, especially in the sub-Saharan part.
A 2022 report from Chainalysis said that despite the continent receiving only 2% of the global value of all cryptocurrencies, between July 2020 and June 2021, Africans received some USD 105.6 billion worth of cryptocurrency payments, an increase of 1200% from 2019. The report also ranked Kenya, South Africa, and Nigeria among the top 10 countries for digital currency use.
The study also backed crypto to address economic challenges in the region, be it by reducing financing gaps for medium and small businesses (MSME) or facilitating the remittance transfer. Out of USD 48 billion remitted to sub-Saharan Africa in 2019, Chainalysis estimated that up to USD 562 million worth of payments were facilitated by cryptocurrencies such as Ripple. Crypto has also accelerated affordable mortgages and is accommodating irregular income patterns that limit credit.
Then we have the example of the digital-only bank “Be Mobile Africa” introducing a crypto-currency payments gateway, thus allowing the continent-based businesses to accept and make payments with Bitcoin and other cryptocurrencies such as Ethereum, as well as stablecoins such as USDC and USDT.
The new payment gateway will enable the users to automatically convert incoming crypto payments into ZAR, USD, or EUR. They will even have the option to keep crypto with “Be Mobile Africa” providing full custody.
Then we also have crypto start-ups in the continent such as Tamadoge, Battle Infinity, Yellow Card, Polkadot, Solana, Akoin City, and Bitsika, who have been hitting headlines recently.
Crypto is opening new avenues for small and medium-sized African businesses to access investors’ funds. More and more people in this part of the world will use crypto, as digital payments are becoming the preferred mode for money transactions.
According to a policy brief by UNCTAD (United Nations Conference on Trade and Development), the percentage of crypto users as of 2022 in Kenya is 8.5%, followed by South Africa (7.1%) and Nigeria (6.3%). Central African Republic has adopted bitcoin as a legal tender.
According to Chainalysis, $562 million worth of investment remitted in sub-Saharan Africa was done via popular cryptocurrencies like Ripple.
Not only businesses, but individual Africans are also using crypto to execute personal banking transactions. They are using crypto to accept payments. Amid inflation, crypto users are even storing their wealth in USDT to preserve the value of their money. Also, the traditional banking system has this heavy reliance on third-party payment intermediaries and the lack of full transparency on transaction details, both of which can be addressed by crypto’s peer-to-peer transaction feature.
Since crypto is associated with blockchain as well, hackers will find it impossible to access people’s funds without the wallet seed phrase.