The adoption of cryptocurrencies in Africa has been a topic of interest in the cryptocurrency community, with many cryptocurrency analytic firms showing different projections and estimates of how much Africans are using these new asset classes.
A positive report by cryptocurrency exchange KuCoin reveals that cryptocurrency transactions increased by over 2,500% in 2021. The report however reveals that the number of crypto transactions in Africa constitutes roughly 2.8% of global volumes.
The report claims that both private and public organizations are increasing their investments in Research and Development (R&D), in order to create the conditions for the adoption of the asset class. It reads, “Local public and private enterprises are increasing their investments in R&D, while creating the necessary bedrock for the establishment of the next generation of information and communication technologies. Most African countries have adopted bold policies aimed at building economies centered around modern technologies, including blockchain and cryptocurrencies.”
What you should know
- The report reveals that the average number of monthly transactions across African countries has shown a 1,386.7% increase from January 2021 to January 2022.
- The report also states that the number of users has also increased significantly, showing a 2,467.2% spike over the same period.
- The average amount per transaction has decreased, which the report states that it indicates, “that the adoption of this technology is taking place not only for large transfers, but for small payments as well.”
- The report attributed the massive growth in adoption to the high level of inflation seen in African countries. It states, “the adoption of crypto technologies in Africa were preceded by the availability of the technology and the presence of several motivating factors. These include the desire of the population to react quickly to any changes in the exchange rate of national currencies in countries with high rates of inflation and devaluation.”
- It further reads, “The possibility of quickly transferring investments across assets mitigates the chance of savings depreciation. Not all countries are as inflationary as those of Sudan (260%) or Ethiopia (66%). Still, the desire to preserve the purchasing power, even under 6.4% inflation (Tunisia), is natural for those seeking to preserve the value of their savings.”
- The report reveals that more than 88.5% of cryptocurrency transactions made by Africans are cross-border transfers and they turn to cryptocurrencies due to low transaction fees. It further reads, “In many cases, users pay less than 0.01% of the overall amount of the transaction transferred in cryptocurrencies. This simultaneously solves several issues associated with crypto transaction restrictions that are in place in countries like Nigeria and Kenya. End-users of services can conduct transactions in a matter of milliseconds without fear of temporary freezes of transferred funds, as is often the case with conventional payment systems.”
The report claims that Cape Town and Lagos are the powerhouses of the digitalization process in Africa. It reads, “Cairo, Cape Town and Lagos can be considered the engines of the digitization process in the region. Kenya is a separate area of focus in East Africa, with the number of cryptocurrency transactions in Nairobi — its capital — being 64% higher than in the rest of the region.”
Nourou, founder of Bitcoin Senegal, is convinced that the thousand percent growth rates for Bitcoin (BTC) adoption “will continue in coming years.” He states, “Take a look at the way in which cars, mobile phones and consumer electronics took off on the continent. Africa is a continent where lightning-fast progression and adoption is common.”
The report concluded by stating, “With the proper legislative attention and acceptance of the need for such digital technologies by the authorities, crypto platforms could be an effective steppingstone for the overall growth of Africa’s GDP.”