Why Africa Continues to Lag Behind in Cryptocurrency Adoption
By
Jeffrey Gogo
Africa continues to dominate Google Trends search interest for
“bitcoin,” but that has not translated into widespread adoption of
cryptocurrency by users and businesses. Apart from opaque regulation and
a lack of awareness, one of the major reasons for this failure has been
the expansive use of mobile money on the continent.
Crypto Adoption Disappoints, Even as Africa Dominates Bitcoin Search Interest
According to Google Trends, the biggest search interest for bitcoin
in the world is by potential investors from Nigeria, South Africa and
Kenya – the three biggest cryptocurrency markets in Africa. That
dominance is, however, predominantly limited to trading activities on
exchanges. On a few occasions, bitcoin may be used as a means of
payment, mostly to overseas suppliers.
But despite that world-leading interest, Africa still lags behind the
rest of the world in everyday BTC use and adoption. The cryptocurrency
has found it difficult to break the stranglehold of convenience,
simplicity and efficiency that, like a magnet, draws millions of
Africans to mobile money. The continent of 1.2 billion people is home to
over 50 percent of the world’s mobile money services.
or example, with a basic telephone handset, one can send or receive
money via SMS anywhere within a particular country, without the need of
an internet connection. By comparison, you will need a smartphone and a
secure internet connection to complete a cryptocurrency transaction.
While internet use has risen sharply in
the past 20 years, users from Africa account for just 10 percent of the
global total, making the case for crypto on the continent even more
cryptic. Also, erratic power supplies in many countries continue to
impede the internet access on which cryptocurrency largely depends.
Beating Mobile Money at Its Own Game
Vin Armani, founder and CTO of Cointext,
an internet-free wallet service that allows users to send or receive
bitcoin cash (BCH) via SMS – just like mobile money – believes his
service could rival mobile money in the continent. In Africa, Cointext
is currently available only in South Africa, and it’s unclear how many
people are actually using the service there. “We are preparing to make a
major announcement that will give us global coverage (in every
country),” Armani told news.Bitcoin.com.
“We’re currently working on an integration that will make us
available for smartphones throughout Africa. We’re also working on SMS
solutions for a few other African countries,” another official from
Cointext explained separately.
Elisha Owusu Akyaw, a 17-year-old Ghanian crypto investor and
influencer, has made a fortune investing in bitcoin. He believes that
“Cryptocurrencies should probably integrate with mobile banking
platforms.” Akyaw might have a point. The mobile money sensation has
grown very deeply in African economics to the extent, perhaps, of
defining its people.
“The power of financial technology to expand access to and use of
accounts is demonstrated most persuasively in Sub-Saharan Africa,” the
World Bank’s Global Findex Database detailed
in its financial inclusion survey, which found 21 percent of adults on
the continent now have a mobile money account. This is “nearly twice the
share in 2014 and easily the highest of any region in the world.”
If that is not enough, cryptocurrencies will likely have to fight
tooth and nail to gain any reasonable market share in the mobile
money-dominated payment systems in Africa, a region often touted as the
next frontier for virtual currencies. In Zimbabwe, publicly listed
Econet Wireless controls 95 percent of the mobile money market share
through its Ecocash platform. The seven year-old service is so
successful that almost every government department depends on it for
electronic payments.
With more than six million users in the Southern African country,
Ecocash has processed over $23 billion worth of transactions since
launch in September 2011. It boasts more than 32,000 agents (merchants)
throughout Zimbabwe. This is the sort of entrenched competition that
cryptocurrencies will have to contend with. There will be 725 million
mobile phone subscribers in Africa by 2020, according to the GSM
Association, who could either plug into crypto or mobile money.
Cumbersome Registration Processes Dissuade Crypto Use
Bernard Parah, a 26 year-old entrepreneur from Lagos, Nigeria,
recognizes this challenge and opportunity. Two years ago, he founded Bitnob Quickserve,
a platform that allows Africans to buy vouchers and reedem them for BTC
without the need to complete KYC or AML procedures. Parah posits that
one of the biggest hindrances to cryptocurrency adoption is the
labyrinth of verifications required by exchanges at registration.
“We believe that [the service] will reduce the entry barrier for many
people who want to try out bitcoins here in Africa,” Parah told
news.Bitcoin.com. “Onboarding users needs to be made simpler. Many first
time users give up at the point where they have to upload their
personal identity details for verification.”
Parah also pointed to ease of use and the fear of loss of funds
without recovery as stumbling blocks. “A bitcoin address looks like a
foreign language to new users,” he notes. “Many people are not ready to
be their own banks, they would rather settle for convenience over
security,” said Parah, who reckons there’s need for more awareness and
education about crypto.
A litany of fake bitcoin schemes have not helped the cryptocurrency
cause either. In Uganda, for example, thousands of people have fallen victim to
a number of Ponzi schemes, including the D9 Club, which promised to pay
members in BTC. The scheme, now collapsed, masqueraded as a sports
trading company, promising members hefty weekly payouts in bitcoin on
initial investment of between $250 and $2,000. “Scams give Africa [and
crypto] a bad name,” decried Chimezie Chuta, an IT specialist and
bitcoin enthusiast from Nigeria. Regulation has, as always, been a
sticky issue where bitcoin is concerned.
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