In 2021, the number of crypto users in Africa has grown by 2500%, which is completely changing the investment environment on the continent. In 2021 alone, the number increased by 25 times! What is the reason for such a high interest of Africans in cryptocurrencies, which today raise many questions even in the most developed markets?
Africans are gradually integrating technological advancements into their daily lives. The spread of cellphones has helped the creation of new fields of endeavor. This is drastically and swiftly changing Africa’s investment environment: as mobile devices become one of the drivers of socio-economic development, adoption of technology that permit Internet access continues to climb and become more ubiquitous.
Local governments and businesses are boosting their investments in the research and development of the next generation of information and communication technologies, paving the way for their adoption.
The majority of African countries have enacted bold policies aiming at establishing an economy based on cutting-edge technology such as blockchain and cryptocurrency.
As a result, some crypto fans claim that Africa is the most promising region that has successfully transitioned from the cash economy to a bright digital future without relying on traditional banking. However, the factors that stifle the growth of cryptocurrencies on the continent are just as numerous as those that encourage it.
Users must, for example, have a particular level of technical expertise, education, and technical equipment in order to access such services.
Unfortunately, not everyone has access to the necessary equipment. Only 45% of African adults own smartphones, and only 33% have stable internet access. The latter value is much lower than in Europe (87%) and the USA (81%). Nevertheless, even such indicators can be considered a positive trend for the continent. In addition, you can receive and send mobile money using even the most primitive phone with the USSD function for $10.
Introduction of new technologies
Cairo, Cape Town and Lagos can be considered as engines of the digitalization process in the region. By the way, Lagos, the business capital of Nigeria, in 2019 broke the world record for the number of searches on Google about bitcoin.
Kenya is a separate region in East Africa, where the number of cryptocurrency transactions in the capital – Nairobi – is 64% higher than in the rest of the region. Durban, the Western Cape and Gauteng in the southern part of the continent have also taken the path of increasing the number of users of modern technologies.
Tunisia and Morocco also support technology projects.
People are keen to adopt modern technology for use in their profession and for leisure, thanks to a 2018 law supporting a start-up culture in the region, which has increased the pace of technological businesses.
Côte d’Ivoire, Senegal, and Dakar, all in West Africa, are French-speaking countries that invest heavily in the development of digital ecosystems in collaboration with international organizations. As a result, international investment flooded into these countries, creating new jobs and progressively raising the local population’s level of technological knowledge. According to KuCoin’s most recent data, bitcoin transactions in the aforementioned nations have increased by 1250-2670 percent in the last year.
This growth dynamics is also associated with the low values observed in previous periods, since the number of crypto transactions in Africa is 2.8% of global volumes. The average number of monthly transactions in African countries increased by 1386.7% from January 2021 to January 2022. The number of users also increased significantly, showing a growth of 2467.2% over the same period. However, the average amount per transaction has decreased, which can also be considered a positive fact, indicating that the implementation of this technology is taking place not only for large transfers, but also for small payments.
The availability of technology, as well as the presence of various motivating factors, aided in the adoption of crypto technologies throughout Africa. In nations with high rates of inflation and devaluation, one of them is the desire of the populace to react rapidly to any changes in the exchange rate of national currencies.
The capacity to move money quickly across assets decreases the chance of savings degrading. Not every country has the same level of inflation as Sudan (260 percent) or Ethiopia (100 percent) (66 percent ). Nonetheless, even with 6.4 percent inflation (Tunisia), the urge to maintain purchasing power is logical for people seeking to preserve the value of their investments.
Blockchain and Cryptocurrency
In recent years, supporting global exchanges in education has also become very convenient for the younger generation of Africans interested in new technologies and finance.
KuCoin, for example, one of the most well-known global crypto exchanges, offers “Learn and Earn” educational resources to users, allowing them to learn about current trends and advances in the cryptocurrency business while also becoming acquainted with blockchain financing. As a result, young Africans have the potential to lessen entrance barriers and experiment with new investment strategies.
In Africa, KuCoin is also sponsoring a series of blockchain and cryptocurrency promotions. At the start of 2022, the exchange not only began promoting education through university trips from Nigeria, but it also actively expanded its influence on the continent via the Internet, assisting Africans in obtaining more information and education with a variety of benefits.
The findings of the KuCoin study are consistent with the reality that blockchain technologies and cryptocurrencies are frequently used to pay for micro-work in Africa, despite the region’s high unemployment rate.
The rate of unemployed adults in South Africa hit 34% in the third quarter of 2021, highlighting the population’s desire to earn money and compensate for the lack of jobs. Due to the availability of micro-jobs that can be completed remotely, this difficulty has begun to fade in recent years. Such problems can be broken down into multiple simple components and solved without requiring particular education or extensive understanding in a relevant discipline.
Previously, high fees associated with making payments were damaging to labor expenses and discouraged employers. The situation has greatly improved since the introduction of P2P systems. Cross-border transfers account for more than 88.5% of all cryptocurrency transactions in Africa. The minimal commissions are the reason for the popularity of such transactions. In many circumstances, users pay less than 0.01% of the total value of the cryptocurrency transaction. This solves various issues connected to bitcoin transaction limits in countries like Nigeria and Kenya at the same time. End users of services can execute transactions in milliseconds or less, without having to worry about interim freezes on transmitted monies, as is common with traditional payment systems.
Freelance payments in Africa are often made using blockchain technology, resulting in a win-win scenario for all parties to the contract. Employers get access to a wide selection of contractors willing to work for relatively low wages, while freelancers find decent jobs without high transaction fees or the possibility of fraud.