As a driving force behind a number of innovations across the world, cryptocurrencies are continuing to make their mark in countries like Africa. As the popularity of cryptocurrencies continues to grow, and with African countries such as South Africa and Kenya opening up their first Bitcoin ATMs in early 2018, the technology is continuing to present new opportunities across Africa. Here, we’re taking a closer look at how this technology is opening up new avenues for African citizens to explore.
Connecting The ‘Unbanked’
A large proportion of the world are classified as ‘unbanked’ meaning they don’t have access to any form of bank account from a bank or other financial institution. A large proportion of this ‘unbanked’ popularity are located in Africa, as a result of the extent of poverty in some areas in the country. Due to the fact cryptocurrencies are globally accessible, and the payment system is a simple process, time is saved when it comes to making payments, and anyone with an internet connection is able to access this. With the option to deal with an online broker as opposed to a series of face-to-face interviews and screening in the banks, the ‘unbanked’ are able to access a broad range of services which they never had before. The adoption of digital banking is becoming highly important in the financial world, and with access to even the most basic of technology which can connect to the internet, a large proportion of the ‘unbanked’ are now able to make payments like the rest of the population.
FinTech Innovation In Africa
FinTech seem to be a huge innovation in sub-Saharan Africa, with a large number of start-ups appearing in the last few years. Kenya is a big driving force behind FinTech innovation in the country, with a number of digital payment platforms being leveraged in the country’s ecosystem. While Kenya is leading the way in this section, Uganda, Nigeria, Ghana and Tanzania are also beginning to catch up and cryptocurrencies and blockchain technology are continuing to be a keen focus. While a large majority of people are still served by traditional financial institutions, FinTech and digital payment systems could be the future of Africa’s financial movement.
New Opportunities For Young Entrepreneurs
With the increasing popularity of cryptocurrencies, the industry is opening up a new realm of employment opportunities. With new innovative careers in blockchain technology in a series of sectors, and even the option to utilise cryptocurrency in order to raise funds as a legitimate crowdsourcing alternative, young entrepreneurs are able to quickly build their businesses and generate a large portion of funds from across the globe, which may have originally been inaccessible. A large number of cryptocurrency related start-ups have been opened, including Bitkoin in Nigeria, a peer-to-peer trading platform, and BitPesa in Nigeria, Kenya and Uganda which leverages blockchain to reduce the cost of business payments across sub-Saharan Africa. Elisa Owusu Akayaw is the prime example of a young entrepreneur leveraging the opportunities that Bitcoin can offer, as he raised £40 million Bitcoin through his marketing company.
Despite being located within the same continent, the cost of sending funds across the continent can be expensive and slow. Cryptocurrencies on the other hand, offer a much faster and low-cost way of transferring money, therefore offering the opportunity to further improve overall economic growth across the continent. Digital currencies, such as Bitcoin and other cryptocurrencies, can help to support not only cross-border trade, but also help to improve the accessibility of international trade. With the opportunity to improve tourism markets and for small businesses to access a much broader customer base, cryptocurrencies are able to open up new possibilities to improve transaction speed and cost.
High Inflation Rate Alternatives
It is well-known that inflation in Africa is often unstable, with some of the ‘best’ inflation rates sitting at a whopping 15.37%, reported by Nigeria in 2017. In comparison, the UK’s inflation rate remained static at 2.4% in April, May, and June of 2018. Due to the volatile nature of inflation, and the huge percentages which some countries are having to deal with, the economic stability of the continent is worrisome for many. Due to the lack of regulation and interference by governments, cryptocurrencies remain unaffected by the inconsistencies of the African economy, providing a more stable option for many citizens across the continent. With South Sudan reporting a huge inflation rate of more than 280%, Africans in the country are able to secure their funds in a much safer environment.
As you can see, there are a broad number of benefits to cryptocurrency adoption in Africa, and as popularity continues to rise, we could see how blockchain and its cryptocurrencies influence everyday life across the continent.
By Damien Troy