Is Africa the Land of Crypto Opportunities?
By Eddy Travia & Nhial Majok
17 May 2020
It’s time to take a fresh look at crypto opportunities in Africa.
The fall-out from the 2017/18 hyper-speculative wave of Initial Coin Offerings (ICOs) affected a large number of African crypto market participants and resulted in cryptocurrencies being viewed in a negative light for some time. However, the relentless dedication of crypto entrepreneurs and the revival of bitcoin’s price has since prompted African users and companies alike to reassess the efficiencies and benefits that blockchain technology can bring to the Continent with its surging population of young consumers.
Africa is the world’s second-fastest-growing region economically and demographically with a population in excess of 1.2 billion and a GDP of over USD2.4 trillion¹. A fast-growing number of predominantly young consumers are looking for easy and cost-effective solutions to pay for goods and to grow and protect their savings. Additionally, the African diaspora working abroad is constantly looking for cheaper and faster ways to send money back home.
African nations have lagged in the upgrading of traditional banking but the phenomenal success of Kenya’s Safaricom mobile money solution ‘M-Pesa’ demonstrates that there is a huge demand for accessible financial technology services. It is also interesting that financial innovation came from a telecom company and local banks have been working hard to catch up since².
The median age in Africa is 19.5 years³. Africa accounts for 19% of the global youth population, a number that is anticipated to increase to 42% by 2030¹. Despite a similar population size in sub-Saharan Africa as in Europe and Northern America combined, the rate of 36 million average annual births in sub-Saharan Africa is three times greater than in Europe and Northern America⁴.
This means that Africans represent a significant portion of the developing world population; a population that is rapidly adopting technology for all aspects of its daily life. Sub-Saharan Africa will remain the fastest growing region with an additional 167 million unique mobile subscribers from 2018 to 2025. This will take the total subscriber base in the sub-Saharan nations to just over 600 million, representing around half the population⁵.
The younger generation has a tendency to adopt new technologies at a faster pace, so African demographics seem to support the case for a higher adoption of cryptocurrencies than in other regions. In fact, recent data seem to point in that direction. Over the last two years, three of the top five Google searches for ‘bitcoin’ have come from countries in Africa; namely South Africa, Ghana, and Nigeria, respectively. Nigeria took the first place in 2019⁶.
Additionally, recent peer-to-peer trading volumes have been the highest ever in sub-Saharan Africa, surpassing the highs of december 2017 ⁷. Matt Ahlborg, data scientist and creator of www.usefultulips.org, posted the graph below on his Twitter account on May 12 showing the combined trade volume of LocalBitcoins and Paxful in sub-Saharan Africa⁸.
Unsurprisingly, this market is attracting major initiatives, including non-crypto ones such as the Mojaloop Foundation which plans to develop and promote a free, open-source real-time payments platform⁹.
Although small in absolute value compared to China or Silicon Valley, the African continent is one of the fastest-growing technology markets in the world. Three of the top destination countries for startup investment were Kenya, Nigeria and South Africa, receiving more than $1 billion in investment for the first time in 2018 (collectively), with fintech businesses leading the trend¹⁰. 2018 was also the first year when fintech growth in Africa, Australia and South America outpaced growth in traditional hubs like the US, UK, and China¹¹.
Following a tour in Africa in late 2019 where he met with several members of the startup and crypto community, Twitter founder and CEO Jack Dorsey announced his, later withdrawn, intention to stay in Africa for three to six months in 2020¹². Dorsey is known for bringing bitcoin to the other major venture he leads, the mobile payment app Square¹³, and it can be implied from Dorsey’s own tweets that he sees Africa as a land with a bright future when it comes to cryptocurrency adoption.
Another figure of the African crypto landscape is Senegalese-American hip-hop artist Akon. Through his company named Akoin, Akon wishes to create a new city in Senegal (Akon City) with the Akoin cryptocurrency as its main medium of digital payment. He also plans to launch Akoin soon in an industrial tech park in Kenya, the Mwale Medical and Technology City (MMTC)¹⁴.
In an article published by the Kenyan news outlet Daily Nation in February earlier this year, pioneer crypto entrepreneur Nhial Majok, Founder and CEO of Kesholabs, a Kenya-based African venture builder and blockchain development studio, said he believes ‘that the growth of the crypto-market and blockchain solutions is going to rapidly pick up over the next two to five years. Medium term projections are that the whole space will hit Sh100 trillions in that time frame.’¹⁵
In the wake of increased interest from African central banks and private companies and mindful of the African crypto trading market potential, cryptocurrency exchange operator Binance has been making serious efforts to become a major player in Africa. At the end of 2018, Binance launched Binance Uganda which recorded 40,000 sign-ups during its first week of operations¹⁶. Similarly, signups for Binance in Nigeria have shot up in early 2020. Emmanuel Babalola, Binance’s business manager in Nigeria, bets on education by delivering ‘masterclasses’ in crypto trading in neighboring Benin¹⁷. Binance Nigeria trading has recently surpassed USD1m per day according to Binance founder and CEO Changpeng Zhao¹⁸. Binance Charity Foundation has been very active in Africa where it launched several caritative initiatives led by Helen Hai, also a goodwill ambassador for UNIDO (United Nations Industrial Development Organization)¹⁹.
Headed by Yele Bademosi, Binance Labs Incubation Programme backed several crypto startups in Africa including Bit Sika, a Ghanaian crypto-based donations platform, Kenyan private securities platform Raise and Nigerian payments startup Xend²⁰. Bademosi has recently launched his own social payment app where fiat and cryptocurrencies co-exist²¹.
This is aligned with the insights of Eddy Travia, early blockchain investor and CEO of London-listed Coinsilium Group, as quoted in the Kenyan publication Business Daily, “the next step in blockchain adoption is the on-boarding of millions of news users oblivious to the technology, enabling the services they need to finance their businesses, send money overseas or for protecting their savings from erosion by inflation”²².
It also matches the vision of previously-quoted venture founder Nhial Majok whose Nairobi-based blockchain development studio Kesholabs was recently accepted into Celocamp, “we wish to leverage blockchain technologies from initiatives like Celo to build what Africa’s bottom billion needs, a platform enabling easy and cost-effective remittances and payments”. This is an objective Majok is hoping to achieve with Kesholabs-incubated Pesabase, an application building a bridge between blockchain and mobile money to financially connect Africans everywhere.
Majok is an African entrepreneur with first hand experience of the shortcomings of the legacy financial system. He is keen to use his expertise in blockchain technologies and cryptocurrencies and his own experience as a user of remittance solutions to contribute to Africa’s digital transformation and financial inclusion.
With the above in mind, every major blockchain project, exchanges and crypto-investment house is invited to reflect upon their African market strategy and think about the ways they can onboard Africa’s young demographic into their community. Major exchange operators such as Binance have demonstrated that it can be done, especially by leveraging the know-how and market insights of local entrepreneurs. Who will be next to make serious inroads into the land of crypto opportunities?
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About the authors
Eddy Travia
Eddy Travia has been a pioneer investor in blockchain technology startups since 2013. Eddy is co-founder and CEO of Coinsilium, a London-listed venture builder, investor and advisor of early-stage blockchain technology companies (AQSE:COIN). Coinsilium was the first blockchain investment company to join a stock exchange via an IPO in 2015. Eddy has led early-stage investments in 20 blockchain companies around the world including SatoshiPay, IOV Labs, Blox and Indorse. In addition to his role at Coinsilium, Eddy has recently been appointed as Regional Director Asia Pacific for IOV Labs.
Nhial Majok
Nhial Majok is the Founder and CEO of Kesholabs. Kesholabs is an African Venture Builder and Development Studio whose primary focus is in Blockchain-driven innovation and disruption.
Prior to Kesholabs, Nhial worked at IBM — Australia for many years, where he quickly rose through the ranks to the position of Tech Lead. During his tenure there, he was successful in guiding and delivering large-scale I.T. infrastructure projects. He often led sizable teams, and managed multi-million dollar budgets for IBM clients that needed assistance with disaster recovery planning and/or data centre migration.
Nhial is a lifelong learner, an avid reader of books and research articles predominantly in the economics, business and technological fields. Finding Bitcoin in 2013 was a complete career-changing event for him.
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