The Money of Africa’s Future: Digital currencies in the world’s second-largest continent
Africa is a vast continent, and as opposed to Asia, the world’s largest and most populous, it isn’t dominated by three or four vast economies. The reality for sub-saharan nations like Ghana is very different to what Egyptians experience, and different still to that of South Africans. We have written in the past about Europe, the US, Asia and South America, but nowhere have we found such disparity in both access and adoption, so bear with us:
Bad news first: some countries have outright banned digital currencies
Yes. Full bans. Morocco, Algeria, Libya, Zambia and Namibia have decided that digital currencies were too much of a liability for their own national financial systems, and have decided to just get rid of them. The very usage of these currencies is subject to fines, and even imprisonment. In Morocco, for instance, the state has considered digital forms of payment to be “hidden payment systems”, and the Bank Al-Maghrib (their central bank) has issued a list of authorized intermediaries and currencies. Only those can be used.
It goes without saying that for these four countries at least, the future of digital currencies is more than a little bleak.
Good news: the potential is off the charts
We know there are a few socio-economic conditions that help spur adoption. Unavailability of banking services and an underbanked population. High inflation rates and instability of financial systems. Many African nations suffer from these problems to a very high degree.
There are hurdles, of course, such as a lack of infrastructure for the usage of digital currencies. Smartphone and Internet penetration is relatively low when compared to other such regions, such as South America.
However, these issues are easier to fix than other hurdles. Both Google and Facebook are heavily invested in maximizing access to the Internet in sub-saharan Africa, with projects that are worth billions of dollars. With the mitigation of these material limitations, adoption in Africa is expected to grow exponentially.
The continent’s largest economies are taking the lead
South Africa and Nigeria are the two largest economies in the continent with some distance, and they are leaders in several of the most significant adoption rates. South Africa ranks 3rd worldwide in digital currency ownership rates, while Nigeria ranks 5th. The signs for both countries are unmistakable, including one of the most welcome of all, which is regulation. One of the roadblocks that entrepreneurs find when dealing with this technology is a lack of regulation that helps provide customers, merchants and investors with the confidence that comes from being in an area that is taken seriously by legislators.
And the numbers we’re seeing aren’t limited to these intangibles. They are very real. Nigeria and South Africa (but also Ghana!) are propelling Africa into the forefront of global digital currency discussions.
Blockchain is being experimented with outside of money
The fact that many African nations don’t have the same institutions and reliable processes as developed countries elsewhere means that there is room for innovation in areas that others may overlook. Sierra Leone, for instance, is using blockchain to create a groundbreaking ID system in one of the world’s poorest economies. Uganda is using the technology to fight its counterfeit drug problem.
Wherever blockchain technology can help minimise the continent’s infrastructural scarcities, it will create the potential for massive economic growth. And some of the world’s leading business tycoons are taking notice.
Jack is coming (maybe?), and growth is too
Jack Dorsey, CEO of Twitter, spectacularly announced he was moving to Africa for six months. The reason he cited was, you guessed it, Bitcoin.
Now, Jack’s plans may have been put on hold due to the COVID-19 pandemic (and maybe the board’s reaction to their CEO being outside of the country for months on end), but the reason why Jack wanted to move in the first place is quite real.
Sub-saharan Africa has been acknowledged by academic studies as well as independent analysis by some of the world’s biggest consulting firms, as the next big growth market. This could have a variety of implications, but one of the most significant is that it will require money to be a whole lot more reliable than it is right now. Decentralised digital currencies aren’t, of course, known for their stability. But stablecoins are. A money revolution is coming to Africa, and digital currencies, in some shape or other, will be key to that process.
Is your company ready for the future?
These markets may be untapped now, but they won’t be available forever. Commerce will become global, and areas where you never thought you’d want to sell will become the markets where real growth can happen.
Utrust provides borderless, foolproof payments that you can accept from anywhere in the world and get paid in fiat in your usual bank account.
Join Utrust now, and make sure your company enters the future ahead of your competition.
Why you need to pay attention to Digital Currencies in Africa. was originally published in UTRUST on Medium, where people are continuing the conversation by highlighting and responding to this story.