Monthly cryptocurrency transfers to and from Africa have risen 55% in one year, driven by small businesses and migrant worker remittances. However, risks abound in an as yet unregulated market.
Monthly transfers of cryptocurrencies of less than $ 10,000 generally made by individuals and small businesses in Africa increased by more than 55% in one year, reaching $ 316 million last June, according to data from Chainalysis, a US company specialized in investigating blockchains.
The number of monthly transfers also grew by 50%, topping 600,700, according to Chainalysis, which states that this study represents the most comprehensive initiative carried out to date to track the global use of cryptocurrencies. Much of the activity took place in Nigeria, the continent’s strongest economy, along with South Africa and Kenya. This represents a 180 degree turnaround for bitcoin which, despite being born a decade ago as a payment tool, has been used mainly for speculation and by financial agents, not for trade.
Why this boom in Africa? Young, tech-savvy populations that have quickly adapted to bitcoin; weaker local currencies that make it difficult to obtain dollars, the de facto currency of world trade; and a convoluted bureaucracy that complicates money transfers.
The bitcoin users interviewed, residents in five countries as diverse as Nigeria and Botswana, say that cryptocurrency helps the population to make their businesses more agile and profitable, and also those who work in places like Europe and North America to keep more of it. of the money they send to their country.
Sylvester Kalu, who runs a textile starch factory in Uyo, eastern Nigeria, uses bitcoins to import inputs from Istanbul and Shenzhen. “Everything is for the oil. When the price of oil fell, the foreign currency became scarce, ”he explains. “And it became a big problem.” This 30-year-old businessman explained that his transactions have added about 2 bitcoins each time, and adds: “I don’t need banks at all, I don’t need anyone to use the back door to get dollars.”
Timi Ajiboye, who runs BuyCoins, an exchange in Lagos, says that in June, the monthly volume of his cryptocurrency operations more than tripled, to $ 21 million, following the devaluation of the naira in March.
Exchange houses across Africa speak of a similar boom. Yellow Card, which operates in five countries, stated that its monthly cryptocurrency volumes have increased fivefold in 2020, reaching $ 25 million in August. One of the big impulses comes from migrant workers who use bitcoins to send remittances, he added. Luno explained that the combined volume of monthly bitcoin transactions from all market participants in South Africa and Nigeria had risen 50% this year, topping $ 536 million in August.
And bitcoin, although convenient for making transfers, is not used much on a day-to-day basis: stores and landlords rarely accept it, for example. This means that friends or relatives to whom workers send money have to convert it back to the traditional currency, often by going to an exchange trader in their country, which is an additional risk.
And more and more people are finding more benefits than potential risks. “People are very willing to embrace technology that makes their lives easier,” says Frankline Kihiu, a cryptocurrency trader in the Kenyan capital Nairobi. “In most African countries there are many government restrictions that bitcoin removes.”
