Pundi X view in Africa: The conditions for a cryptocurrency continent
On a recent trip across Africa I connected with the Pundi X community, who are, I can proudly say, dedicated to support us in this journey to spread the use of new and inclusive payment technologies.
But travel to Ghana, Benin and Nigeria also prompted me to consider some broader issues about the cryptocurrency market on the continent.
It was my honour to display XPOS technology to His Imperial Majesty Ooni Adeyeye Enitan Ogunwusim Ojaja II, Adebisi Adedeji from Nigeria’s Central Bank, a representative of Ecobank, software developers and captains of industry. I think it’s fair to say that all saw the immense potential of our device for Africa. More on which later.
But after concluding them it was also difficult not to conclude that if Africa has been overlooked as a cryptocurrency market up until now it won’t stay that way much longer, for a variety of reasons.
1. Economic conditions make crypto attractive
As the International Monetary Fund this week noted, cryptocurrencies’ success depends largely on how effective central banks can be.
At least five African economies are currently registering annual inflation rates north of 20 per cent; some are much higher. As Venezuela has shown, rising inflation can be a spur for consumers to adopt cryptocurrencies.
Combined with the favourable, market side of the economic equation — real GDP growth of more than 5 per cent a year and the most youthful labour market in the world — and you can see a potent combination of incentives for moving into crypto.
2. New currencies can support financial inclusion
Estimates vary as to how many of the world’s 2.2-billion unbanked people live in Africa, but a report last year by McKinsey & Company put the figure at above 350 million people in sub-Saharan Africa alone.
As we explained in some detail when launching Pundi X, financial inclusion is likely to be a major motivator for cryptocurrency adoption.
But African business also probably has a more international flavour than other parts of the world, which means use of a single currency and speedier transactions in the form of cryptocurrency are likely to prove most attractive here. Not only does Africa require regular international travel for business people on the continent but it also has major capital inflows as remittances from the diaspora abroad; payments that have for too long been subject to costly fees and delays.
3. Access to technology drives access to cryptocurrency
The growing use of mobile and internet technology is driving a revolution in African economies — and not for the first time.
The GSM Association, which represents the international mobile phone industry, says that sub-Saharan Africa is the fastest growing segment of the world’s mobile market and will add some 300-million smartphones in the three years leading up to 2020.
But Africa has already undergone a mobile payments revolution over a decade ago when consumers started turning their mobile phones to send mobile credit for business transactions. That trend shows consumers are already willing and able to use alternatives to traditional currency: growing access to the internet could well take things further.
As with everything this continental potential will have to meet and conquer a variety of challenges on the national level. But it’s fair to predict that the story of crypto in Africa will not be insignificant.