The continent of Africa is a continent of great size and diversity. There are great differences from country to country with regards to governance and income. All have, however, benefitted hugely from the rapid growth in mobile telecoms. This in turn has brought mobile banking to many on the African continent who would otherwise not have access to traditional banking services.
M-pesa, a mobile money platform, started in Africa but has subsequently spread to nations across the globe. The pilot scheme was trialled initially in Kenya and Tanzania. It was a joint venture between Safaricom and Vodacom, the largest network operators in Kenya and Tanzania. The platform rose from relative obscurity to a point where now nearly 50% of Kenya’s GDP is carried on the platform.
Africa has built an entire banking infrastructure based solely on mobile phones, tailored for needs of Africans. There is no need for expensive fixed line infrastructure and in many ways, Africa has been able to leapfrog the western world in the adoption of internet-based innovation and apps. They even cater for the illiterate. Sadly, and also quite perplexingly the crypto revolution and blockchain has till now had little effect in Africa.
There are several reasons for this slow uptake of crypto on the African continent.
One of the main reasons for the slow uptake of crypto in Africa is due to the high arbitrage levels on the African continent. Local Bitcoin prices on the continent can trade at a 35% premium compared to the average on the major exchanges. Combine this with a lack of access to card payment facilities and it starts to become clear why crypto uptake has been slow. M-pesa has actually inhibited the take-up of credit cards.
This lags behind the rest of the world in terms of percentage of population who know about or use crypto. Also, large gaps in internet coverage and high connection costs exasperate issues.
There has been much talk of Africa becoming the next global economic front, with China investing heavily in infrastructure there. However, this has yet failed to deliver adequate internet access to the poorest in Africa. Only an estimated 35% have access to the internet, with some countries it is as low as 1.4% (Eritrea) and other countries as high as 85% (Kenya).
Literacy rates also vary wildly across the continent although great progress has been made in the last 25 years. The continent is slowly catching up with the rest of the world.
A documentary called “Starting from Scratch” is currently doing the rounds on YouTube and Twitter. It discusses the issue of what would happen if every penny you owned became worthless. The short film charts life after the introduction of Kuvacash, a crypto payment platform in Zimbabwe a country still suffering from the effects of hyperinflation and a recent revolution. As the country attempts to revitalize its economy crypto offers a liquid and trust less method of settlement whilst reducing the chances of government interference.
The documentary was funded partially with a grant from the Dash community and as such the currency receives a lot of attention in it. The thirteenth largest cryptocurrency is stepping up efforts in African markets aiming to become the leading cryptocurrency in countries like Ghana and Nigeria. It has also recently expanded into Togo and Benin.
Other blockchain based technologies have significant use cases that will hugely benefit society. If the continent of Africa is able to create a distributed ledger to record land titles, it will greatly increase the ability for the everyday African to utilize the value in their real estate, providing a huge economic boost. This is a huge problem for the world’s poorest countries and is in many ways symptomatic of the poor governance in these nations. There is also a long history of other nations appropriating wealth and resources from the continent. If Africa can arrange its affairs correctly using crypto they can keep a larger share of the African pie.
I visited sub Saharan Africa in 2013 (namely Senegal and the Gambia) I was shocked to find that in certain areas 4G networks were already available. The penetration was much stronger than that of traditional landlines. This was also the case when I visited Cambodia. I noted that these poor nations had managed to leapfrog many richer nations by completely skipping the landline and ADSL step and moving straight to high speed mobile internet. If the continent of Africa can continue this trend, we may well find that the continent of Africa can leapfrog societies commercial banking stage and move straight to the crypto paradigm. In many African nations crypto would not even have to compete with a flawed fiat-based system.
Binance Labs Director Benjamin Rameau has gone on the record stating the Africa is at the front and centre of the company’s expansion strategy, as it bets on a vision of the 21st century driven by the world’s youngest population as they gain increased access to technology and the opportunities that come with. He has compared the continent to Asia in the 1960s.
Africa is a continent with as many opportunities as it has issues and if it can overcome them as its population doubles over the next 30+ years, we may well be looking to Africa as a model of decentralized banking. Right now, is a pivotal moment for the continent. With mass adoption of crypto in one swoop Africa may be able to solve its banking and poor governance issues in one sweeping action. Only time will tell.