Cryptocurrencies are becoming a commonplace financial tool in Africa, and government institutions in Africa are supporting and overseeing crypto projects to mitigate socioeconomic problems and improve the well-being of residents.
Total cryptocurrency transactions in Africa represented only 2.8% of global transaction volumes in 2021, but African residents often transfer small amounts and actively use cross-border remittances, indicating that cryptocurrencies are becoming a part of daily life.
According to a recent report by Hong Kong-based cryptocurrency exchange KuCoin, the use of cryptocurrencies in Africa has increased by 2670%
in the past year. The adoption of cryptocurrencies in African countries may grow even further to surpass adoption rates in developed countries in Europe and Asia.
The growing popularity of cryptocurrencies in Africa is understandable due to the challenges posed by underdeveloped financial infrastructures and the inflation of national currencies. Even the continent's strongest currencies, such as the South African rand, are among the most underrated currencies in the world. Inefficient monetary infrastructure and difficult access to banks and payment transactions cost people time and money.
Access to the internet is easier than access to banking services in African countries. In the Democratic Republic of Congo (DRC), 12.4 million people have bank accounts
and more than 40 million people have access to the internet. In this environment, cryptocurrency is more profitable than paper money and can be transferred almost instantly via a smartphone. People in Africa use cryptocurrencies to send money to their families, use e-commerce services, and habve the ability to expand their business potential.
Before the advent of cryptocurrencies, African countries used mobile money. The first mobile money company, M-Pesa
, changed the way money was stored and used on the continent. The company's success has led to more than 60% of all mobile money being transacted through African countries today.
African countries are open to innovation, and cryptocurrency projects often find a place to flourish and scale here. The region offers economic and regulatory opportunities to test blockchain architectures and innovative financial instruments for cryptocurrencies. We have already described a pilot project in Kaduna
, Nigeria, in which FCE Group is involved. Another blockchain project recently announced its launch in Africa. Cameroon, Congo and the Democratic Republic of Congo intend to introduce cryptocurrencies at the state level using the TON blockchain.
The TON project is working with three countries to create cryptocurrency solutions and a solid foundation for a stable economy. Cameroon, Congo, and the Democratic Republic of Congo plan to gradually introduce cryptocurrencies to increase opportunities for banks and non-banks to participate in the economy, which will serve as a catalyst for economic growth.
Stablecoins, tokens, and cryptocurrencies can give African residents access to e-commerce and international business, as local banks only operate within countries and access to banking services is severely limited. Mobile money also has its limitations and is not suitable for online transactions and payments.
In countries with high inflation, cryptocurrencies are one way to prevent the devaluation of personal money. This is especially important in countries where there is not enough cash in circulation.
The adoption of cryptocurrencies in Africa is similar to the development of mobile telephony
in the region. Where there was not even a wired connection, people immediately started using mobile networks. Today, blockchain architecture is spreading rapidly in countries that lack traceability and financial infrastructure.