Cryptocurrency Adoption in Africa: How to Catalyze Further Development?
The growing number of bitcoin sales in Africa have generated a great deal of excitement and media coverage. But this is only one metric to demonstrate the real, widespread adoption of cryptocurrencies and blockchain protocols on the continent. While numerous indicators show that there is growing interest in this technology, there is still a number of ecosystem factors that need to be fostered for cryptocurrencies to truly take off.
Regionally Harmonized Regulation
The crypto industry was thrilled when Kenya recentaly established a task force on blockchain, and President Kenyatta himself pointed out the merits of this new technology and the importance of technology in his Big Four plan. It is a clear sign that the Kenyan government is making a strong move to encourage open access and to welcome innovation.
African governments, similarly to those on other continents, are actively exploring ways to learn from and collaborate with blockchain players to formulate policies and frameworks to regulate the industry. My own company, BitPesa, is engaged with the regulators in every market we are active in, from Kenya to Senegal, helping influence the development of flexible and appropriate policies. For instance, we have developed a strong relationship with several departments within the Central Bank of Nigeria and have been actively working to educate and provide information to Nigerian regulatory authorities. BitPesa is a member of the Committee on Digital Currency at the Central Bank of Nigeria, one of the countries with steady bitcoin uptake in the continent. Based on our collaboration with the Nigerian government so far, we feel that there is a healthy dialogue between the regulator and market participants.
As one of the newest technologies, we are still far from regionally harmonized regulatory frameworks anywhere, let alone Africa. Yet, even though there are few regionally harmonized regulatory frameworks in any sector on the continent, including mobile, we are slowly coming to the point where many governments are giving more clear feedback on their stance on cryptocurrency and blockchain, in the form of committees, task forces, and official memos.
Easier On and Off Ramping from Exchanges
Often, the conversion from fiat to cryptocurrency can be fairly difficult, and integrations for the current Fintech firms operating in this area can be complex and lengthy. The payments market in Africa is already quite fragmented, with numerous companies that focus on mobile money, credit cards, and bank transfers differing widely by region and country. In order for an exchange to be truly successful, they need to have localized offerings to help convert exotic African currencies into cryptocurrency.
Since BitPesa established itself as a blockchain pioneer in East Africa in early 2013, the Pan-African blockchain community has grown rapidly. We have made great strides in educating the general public, which has become interested in the new developments, to the point today where bitcoin and blockchain is known on the street for its adaptability and its ability to power cross-border payments. Some innovative techies are already creating businesses around blockchain, while others have built very vocal online communities that spill over to offline events aimed at educating the general public. This small community attracts a lot of press, which invites attention and education about the topic, but it is not representative of large portions of the population.
We are seeing higher adoption of cryptocurrencies, as well as integration of blockchain into apps and other functionalities. Blockchain is still most often associated with new and exciting financial innovations, but it is slowly becoming known for its application to lands deeds, identity, education, and healthcare. Recently, there have also been many discussions about what blockchain expertise and education can do for youth employment in African countries. Since there is a great need for developers in this space, young people across Africa can develop blockchain related knowledge and skills.
It is clear that digitalization of currencies will bring enormous benefits to African countries. However, from public awareness to harmonized regulation, the development of the blockchain ecosystem will define the speed of the technology adoption on the continent.