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Why does Kenya lead the world in peer-to-peer crypto transactions?

For the second year in a row, Kenya leads the world in the peer-to-peer crypto trade, reveals Chainalysis in its 2021 Global Crypto Adoption Index¹. Other African countries are also jumping at the opportunity to protect cross-border remittances and businesses from costly transfer fees and the risk of weakening currencies.

The previous, 2020 Chainalysis report² ranked Kenya the top country in the world in terms of peer-to-peer exchange trades, well ahead of the other 154 countries surveyed. Other top-performing African countries are Nigeria (3) and South Africa (10). (See the last column in the table below).

The top ten countries in the 2020 Global Crypto Adoption Index with Kenya as the world leader in peer-to-peer crypto transactions

Source: The 2020 Geography of Cryptocurrency Report (Chainalysis)²

The 2021 report¹ shows that Kenya continues to lead by the volume of P2P crypto transactions for the second consecutive year. Other African countries ranking in the P2P crypto volume category are Togo (2), Tanzania (4) Ghana (10), Nigeria (18) and South Africa (62).

The top 20 countries in the 2021 Global Crypto Adoption Index with Kenya at the top in peer-to-peer (P2P) crypto transactions

Source: The 2021 Global Crypto Adoption Index (Chainalysis)¹
Source: The 2021 Global Crypto Adoption Index (Chainalysis)¹

Chainalysis ranks countries by their P2P trade volume and weights it to favor countries with lower purchasing power parity per capita and fewer internet users, the goal being to highlight countries where more residents are putting a larger share of their overall wealth into P2P cryptocurrency transactions.

When it comes to the overall adoption of cryptocurrencies (see the third column in the tables above), Kenya and Nigeria are at positions 1 and 2, respectively, in Africa and rank 1st and 5th in the world in global crypto adoption despite the lack of support from the states.

What factors come into play to fuel the growth of crypto in Africa?

A number of reasons explain why Africa is fertile ground for virtual currencies.

1. Cryptocurrencies allow Africans to avoid relatively expensive transfer costs

Remittances from their diasporas abroad form a significant part of the GDP of many African countries. According to the World Bank³, remittance flows to sub-Saharan Africa for 2019 were close to US$48 billion. Large inflows of foreign currency, however, have not led to efficient and inexpensive traditional banking services. The same World Bank report indicates that it is more expensive to send foreign currency to Sub-Saharan Africa than to most other regions of the world. On average, 8.9% of a transaction’s value is taken as fees by intermediaries, whereas the world average is 6.8%. At the other end of the spectrum, the cheapest corridors have average costs below 3.6%.

To avoid these high fees, many Africans choose to use cryptocurrency to send money across borders. In some cases, even domestic interbank transfers are expensive and this incentivises domestic person-to-person (P2P) transactions in crypto as well. Instead of sending money through banks, people give money to relatives or prefer to transfer bitcoins or other cryptocurrencies. Sending money through these platforms costs next to nothing and much less than the costs imposed by traditional banks.

2. Cryptocurrency mitigates currency instability in Africa

Over the past decade or so, the currencies of many African countries have experienced soaring inflation and devaluation, which makes them riskier to do business with and to keep savings in.

The figure below⁵ displays the significant disparity between inflation in Sub-Saharan currencies and the global average.

Historical Inflation: Sub-Saharan Africa and the World

Source: The Benefits of Crypto Integration in Africa⁵

Poor economies are more likely to experience high inflation and relatively high usage of cryptocurrency. It’s almost certainly a causal relationship with currency devaluation prompting people to explore other currency options, including among cryptocurrencies which usually experience the opposite phenomenon, deflation, and those that don’t are usually pegged to major world currencies that are more stable⁶.

Cryptocurrencies, which are global and untethered from any particular state, could be used to hedge against country-specific risk. In particular, the purchase of cryptocurrencies offers a new opportunity to hedge against (very) high inflation. People affected by very high inflation, which affects many African countries, could therefore benefit more than most by keeping savings and conducting transactions in cryptocurrency, using it as an alternative and more reliable financial system.

The graphic below demonstrates the relationship between local currency inflation and the appeal of cryptocurrency.

Kenya’s P2P trade volume in USD versus USD-KSH exchange rate

Source: The 2020 Geography of Cryptocurrency Report (Chainalysis)¹

When local currencies lose value, P2P trading volumes rise soon after. We believe this reflects crypto users’ strategy of mitigating currency devaluation by shifting savings, remittances and other payments to cryptocurrency assets.

Several recent studies by advocates hail cryptocurrencies as a way to create a financial system less prone to crises¹⁰ and as a counterweight to (hyper)-inflation¹¹.

3. Similarity to mobile money

Sub-Saharan Africa is at the forefront of one of the most exciting innovations of our time, the rise of mobile money services. To users, mobile money services are functionally similar to many cryptocurrencies, as they allow peer-to-peer transactions, but are instead managed by telecommunications companies and are usually pegged to national currencies.

Mobile money platforms such as M-Pesa have helped provide banking access to millions of Kenyans in recent years. People without access to traditional banking systems in rural Kenya use digital platforms to conduct their transactions.

It’s no surprise that cryptocurrency has become attractive to many Africans, who are already familiar with the concept of digital money wallets, according to financial experts.

Cryptocurrency exchanges offer the same benefits as mobile money but with the added benefits of further reducing transaction costs and avoiding high inflation.

4. Financial inclusion

Cryoptocurrency’s growth in Kenya and Africa more broadly can be attributed to a fourth significant factor: the large population of “unbanked” people along with those who already rely on similarly digital mobile banking. Kenya is reported to have had 44% of its population unbanked in 202⁰⁷.

The World Bank reported in 2017 that roughly 1.7 billion adults were unbanked⁸ — without an account at a financial institution or through a mobile money service. A third of them living in Sub-Saharan Africa⁹. It means that they don’t have access to the convenience, security and interest that banks provide.

Indeed, insufficient banking infrastructure is another major reason why Africa has a high adoption of crypto.

Cryptocurrencies are gradually increasing their contribution to financial inclusion as they have the peer-2-peer advantages of mobile money services without having their inflation-related drawbacks.

The takeaway

Cryptocurrencies are helping Africans protect their savings or businesses against currency devaluation. They allow cheap money transfers by avoiding high transfer fees and play an important role in financial inclusion. Will cryptocurrency, empowered by blockchain technology, play an important role in boosting the African economy?


  1. The 2021 Global Crypto Adoption Index (Chainalysis, August 2021)
  2. The Chainalysis 2020 Geography of Cryptocurrency Report (Chainalysis, September 2020)
  3. World Bank Predicts Sharpest Decline of Remittances in Recent History (The World Bank, April 2020)
  4. Taming the Tides of High Inflation in South Sudan, (The World Bank, April 2017)
  5. The Benefits of Crypto Integration in Africa (Zerocap, Jauary 2021)
  6. Global drivers of cryptocurrency infrastructure adoption (SpringerLink, March 2020)
  7. World’s Most Unbanked Countries 2021 (Global Finance, February 2021)
  8. The Global Index Database 2017 (Global Findex, 2017)
  9. New Findex notes showcase digital financial inclusion in Sub-Saharan Africa (The World Bank, July 2019)
  10. When perhaps the real problem is money itself!: the practical materiality of bitcoin (Journal of Business Ethics, 2013)
  11. Cryptocurrencies and business ethics (Journal of Business Ethics, August 2016)

Editor’s note

Sankore 2.0 is an Africa-focused community integrating the NEAR blockchain with projects and solutions conceived and built by local developers in Kenya. As noted in the content of this blog, Sankore 2.0 seeks to promote the development of Web3 products in Nairobi — for Kenya and for Africa as a whole.

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