A recent report by market analysis firm Arcane Research in conjunction with crypto exchange Luno, wrote that the lack of traditional financial infrastructure in Africa could make the continent great for crypto adoption. The report shed light on Africa’s financial infrastructure situation and how crypto could play a role.
“Although it is a diverse region, African nations share some key similarities and trends. Economic problems, from high inflation rates and volatile currencies to financial issues such as capital controls and a lack of banking infrastructure, create a fertile ground for an alternative to germinate.”
According to the report, Bitcoin could be one of the cryptos that solve the challenges mentioned, chief among them inflation, due to its deflationary nature. It could also solve the remittance problem experienced in a lot of African nations. A World Bank report published two months ago indicated that expats were sending huge amounts back home from abroad. 2019 alone saw African expats send home $48 billion through traditional remittance systems with an average fee of 9% for a mere $200 remittance. The report also exposed the millions of unbanked people in Africa with 56% less commercial bank branches per 100,000 adults than the world average.
Bitcoin adoption already underway
Bitcoin enabled services are already trying to tackle the remittance issues though. Bitpesa, a Kenyan firm that enables the leveraging of Bitcoin for international payments is one of those services. Bitpesa has grown past just the Kenyan market and gone into other African countries.
Luno CEO Marcus Swanepoel believes that crypto adoption in Africa is headed for a boom. He claimed that his was the first such company to operate on African soil and currently has offices in Lagos, Cape town and Johannesburg. Marcus believes crypto will become main stream in Africa soon;
“Crypto use in Africa will continue to rise, and it is only a matter of time until digital currencies will become ubiquitous. Given how readily they’ve adopted crypto, I would expect countries in Africa to be the first to make the full transition from their traditional financial systems towards crypto.”
Given the fluid adoption of mobile technology and mobile payments that has been seen in Africa, it is plausible that Bitcoin might see the same ease of adoption. It is already the payment form of choice for most freelancers who don’t want to deal with their failing fiat currencies.