Is Africa the next frontier market for cryptocurrencies?
Africa is increasingly hailed as the next frontier market for cryptocurrencies but what’s the situation precisely?
Kenya, Nigeria, South Africa, and Tanzania have some of the highest grass-roots adoption rates in the world according to the Global Crypto Adoption Index. Across the continent, there is a regulatory vacuum on crypto assets and related activities. With the exception of a few markets, most countries have yet to formulate an official policy, legal and regulatory position on these issues. Instead, some African governments have started introducing their own central bank digital currencies (CBDCs). This is the case in Nigeria with the e-Naira and Ghana with the e-Cedi, while other countries such as Madagascar and Tunisia have launched studies on the topic of CBDCs. While Africa’s crypto market grows rapidly, cryptocurrencies have also become increasingly politicized. For the past few years, activists, opposition parties and youth organizations have increasingly resorted to cryptocurrencies to finance their activities. In Nigeria, the protest movement EndSARS—a country-wide campaign against police brutality - was partly funded through bitcoin. In May 2021, leaders of the FixTheCountry movement in Ghana – a youth-led protest movement initiated on Twitter – set up a donation system through cryptocurrencies to finance its activities. Against a backdrop of heightened social tensions due to the economic hardship caused by COVID-19 and growing distrust towards central banks, discussions about the legality and legitimacy of crypto-currencies will feature prominently in the public debate. These forthcoming discussions, which will be influenced by the electoral agenda, could lead African governments to adopt stricter regulations towards crypto-currencies. If you are interested in further research and analysis in the fintech space in Africa, contact us!