Crypto Adoption Soars in Africa
Africa, home to some of the world’s hyperinflationary countries, has attracted a slurry of crypto users in recent months. In the past year, cryptocurrency adoption has increased by 881%. According to a Chainalysis report, adoption in emerging markets is due to cryptocurrency being able to “preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions”
Among the top African countries adopting cryptocurrencies were Kenya, Nigeria, Togo, South Africa, Ghana, and Tanzania. 32 million crypto users, 11.3% of users worldwide, reside in Africa. Here is a bit about what’s driving adoption in each country:
Nigeria
Nigeria has been the leader in crypto adoption in Africa, with over 22 million total users. Globally, Nigeria ranks number four after the U.S., Pakistan, and India, and is considered one of the most crypto-curious countries in the world.
Nigerians have been accumulating cryptocurrency holdings to shield assets again the country’s fiat currency, naira, leading to a record-low slump in its value. As of the end of July, the naira had weekend to 670 per dollar, 58% lower than the black market rate, where the currency is freely traded. Nigeria operates multiple exchange systems, dominated by an official exchange rate managed by the Central Bank of Nigeria. There is also an unauthorized black market, where rates are determined by supply and demand. The crypto exchange rate has emerged as the leader in determining the naira value, as Nigerians move to cryptocurrency to hedge against the local currency’s depreciation and scarcity.
“The USD rate on the crypto floor is used in determining the value of the local currency,” said Aminu Gwadabe, president of the Association of Bureau de Change Operators of Nigeria. Experts agree that investing in cryptocurrency is also driving the naira’s devaluation. Losing more than 30% of its value within the last year, the currency’s drop in value is made worse by local factors such as food and energy shortages, the war in Ukraine, and intense global inflation.
Kenya
Kenya topped digital currency usage as a percent of population in Africa, with a total of 8.5% of the population as users. Kenya is also ranked number one globally for peer-to-peer (PTP) cryptocurrency trading volume. In 2018, Kenya’s Bitcoin holdings accounted for 2% of the country’s total GDP.
In 2021, the Central Bank of Kenya also adopted Bitcoin as a reserve currency, to tackle the rising financial crisis in the country. According to the Central Bank Governor Patrick Njoroge, “Our decision to shift to Bitcoin is both tactical and logical. Our currency has always been the punching bag for the IMF, which always claims that the Kenya Shilling is overvalued. This has led to too much pressure on the Kenyan Shilling, and this has a negative effect on the economy. We are losing too much simply because someone at IMF woke up on the wrong side of the bed. Bitcoin will put an end to this.”
Kenya has also been home to multiple new crypto projects, such as Akoin, a cryptocurrency project developed by American signer Akon, which has received widespread adoption in Kenya. The project is anticipated to achieve $2 billion in monthly transactions by 2022. Kenya also saw the development of Sarafu, a community inclusions currency meant for rural Kenyans, in recent years. The project, which later transitioned into a cryptocurrency, was a basic income program meant to support vulnerable Kenyan households during times of financial crisis.
Central African Republic
The Central Africa Republic (CAR) made headlines earlier this year for adopting Bitcoin as an official currency, the first in Africa to do so and only the second in the world. Shortly thereafter, the president of the CAR, Faustin-Archange Touadéra, announced that the government would be supporting an initiative to develop the country’s blockchain infrastructure.
Titled the Sango Project, the goal was to launch on July 3 and build a “legal crypto hub”. The project was aimed to attract businesses, crypto-enthusiasts, and develop a special economic zone with a dedicated legal framework to be developed by the end of 2022.
In late July, Sango began its first token sale, starting at $0.10 per token. The project plans to raise $1 billion from the token sale over the next year. The coin, which runs on a Bitcoin sidechain, operates on a two-way peg mechanism similar to Blockstream’s Liquid Network. The token, which went on sale July 25, is off to a slow start, according to reports.
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