What is the current state of crypto adoption in Africa?

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The story of technology adoption in Africa

Africa has a history of economic and political instability. Although many African countries are rich in resources, instability continues to prevent African nations from gaining a foothold. As the rest of the world moves forward, Africa seems to be being left behind.

Take landlines for example. According to a Our World in Data technology adoption chart, landlines have required a level of infrastructure development that Africa has never quite reached.

Scroll down though, and you’ll see graphs that show the success of mobile subscription adoption in Africa. Measured as the number of mobile subscriptions per 100 people, a handful of African countries were tied with Canada. Another handful were tied with the United States, Australia and Europe. Botswana and South Africa have even surpassed all of the aforementioned economies.

This phenomenon is known as leapfrog. Leapfrogging is a term used to describe when a developing country skips the path taken by developed countries. By adopting mobile technology, many African countries, such as Kenya and Botswana, have bypassed landlines altogether.

Remittances and Africa

The World Bank said that in 2020, global remittances to low- and middle-income countries reached $ 540 billion.

Africa is one of the regions of the world that depends on international remittances. However, remittances are expensive. The fees for sending money abroad are on average 6.38% of the amount sent worldwide. For the many families in developing countries who rely heavily on remittances, after income tax 6.38% can represent a significant loss.

That’s why companies like M-Pesa, Digital Wallet Corporation, and PayPal Holdings stepped in. The global digital remittance market is expected to grow from around $ 14.5 billion in 2019 to $ 38.8 billion by 2026. This equates to compound annual growth. rate of 13.8%.

However, companies like PayPal still depend on fees and commissions for their income. Fees or commissions are less relevant for cryptocurrency. Cryptocurrencies operate regardless of international borders, and transaction costs can be close to zero. In short, cryptocurrencies can eliminate the time and cost of remittances.

Land ownership

A functioning company relies on a public registry to prove land ownership. A consequence of political instability is that public records can become untrustworthy. It can be caused by poor infrastructure or perpetual government restructuring.

It is a common problem in Africa. Citizens can have title to their homes, but a new government could make their title obsolete, as seen in Zimbabwe. Or, with a non-functioning public land registry, someone might claim ownership of your home and the government might not be able to prove otherwise.

Blockchain technology has the ability to change all of this because the information on the blockchain cannot be changed. A dictator can come to power but he cannot change what’s on the blockchain. This translates into more Africans who can gain security in home ownership and more stability in the real estate markets.

Mobile banking

Another graph of Our World in Data illustrates the adoption rate of mobile money accounts around the world. What is evident is that sub-Saharan Africa comprises almost half of the world’s population of mobile money account users.

Mobile money accounts have proliferated in Africa. The case of M-Pesa in Kenya is the most obvious. M-Pesa is a service that Safaricom started providing in Kenya in 2007. It allows users to store money on their mobile phones and transfer that money through SMS messages. In 2011, 70% of the Kenyan population adopted M-Pesa and in that year Kenya’s GDP growth peaked at 11%. In 2013, the total volume of transactions through M-Pesa was equivalent to 40% of Kenya’s GDP.

But how did Kenyans embrace such new technology so quickly? This may be due to the average age of the Kenyan which is 20.1 years old. Consider the fact that the average African is 19.7 years old. M-Pesa in Kenya may represent a microcosm of what the adoption of continent-wide, cryptocurrency-enabled mobile banking might look like in Africa.

Projects to watch

BitPesa

BitPesa is not a cryptocurrency but they do offer a service whereby Bitcoin is used as a medium of exchange between African currencies. Before BitPesa, transactions often had to be routed through entities outside of Africa for currency conversion. BitPesa speeds up transactions and keeps more money in Africa.

Cardano

Cardano is one of the top 10 cryptocurrency projects targeting Africa. Cardano is in the process of creating a global financial operating system aimed at including the nearly 4 billion unbanked people in the world. So far, they have worked closely with Ethiopia to provide a supply chain system for coffee shipments and an identification system for their education sector.

Global mobile token

World Mobile Token (WMT) is a project native to the Cardano ecosystem with the objective of providing access to mobile services to the remaining population of Africa. This project uses the efficiency of blockchain to connect communities that previous telecommunications companies could not afford to serve.

Africa towards the future

Cryptocurrencies represent the next step in innovation in telecommunications technology.

What M-Pesa has been able to do for domestic trade in Kenya, cryptocurrencies are designed to do on a large scale across borders. Africa is a continent in need of solutions with a young population leading the world in the adoption of mobile technology. If cryptocurrency adoption continues in line with mobile banking trends, we could see a rapid increase in the $ 2.6 trillion market represented by Africa.

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