Cryptocurrency has been one of the best things ever happening to Africa this century. Apart from being a worldwide phenomenon, cryptocurrency can be considered a saving grace for many African countries and their citizens. It is critical to understand what has happened so far to make cryptocurrency an essential part of Africa’s future. This article provides detailed information on what has already happened and how cryptocurrency will help Africa and Africans to develop and grow their economy.
Mpesa in Kenya is an excellent example of how economic tools can hugely impact the economy. Mpesa is a mobile money transfer platform developed by one of the biggest telecommunication companies in Kenya and Africa, Safaricom. When Mpesa was created, many people and banks in the country were against the idea and wanted the government to shut down the project because it offered competition to their services. But due to the then and recently deceased president, president Mwai Kibaki, the project was given the green light to start operating in the country. As a result, Kenya has had a lot of financial growth. People can easily buy, sell and transfer money from one person to another without physically touching the money. It has improved the economy and led to a situation where people can carry out their daily activities and use Mpesa to pay for goods and services, including buying a newspaper at the newspaper stand and having their shoes shined on the streets.
After the first two years of adoption, the adoption rate was rapid until now; it is almost at 100% in the country and growing in the region. Now, it is cryptocurrency’s turn to revolutionize the African economy. Africa has already witnessed the biggest adoption rate o cryptocurrency compared to the rest of the world. But considering the total African population, there is a long way to go before most African people fully adopt cryptocurrency. Although this is the case, some things have happened in Africa and the rest of the world that may impact the cryptocurrency adoption rate increase in the continent. Some of the most recent events include; The most recent, and by this, I mean the last week of April 2022, has been the Central African Republic passing a bill that allowed Bitcoin to be considered a legal tender for transactions in the country. The central African Republic is the second country to do this in the world after El Salvador. Considering some of the most powerful countries in the world and Africa, these two are some of the least known and powerful countries globally. Their economy is also not the best in their respective regions; this may be a pattern that other countries like Africa can duplicate. The pattern is that people and countries adopting cryptocurrency suffer financial challenges or are trying to improve their financial situation. When they try out cryptocurrency, it provides a platform where they can easily make money and ensure they can improve their financial situation in one way or the other. The second factor that will have a considerable role in the cryptocurrency adoption rate is the rapid increase in inflation happening in Africa and the rest of the world. With the side effects of COVID-19 and the war between Russia and Ukraine, prices will continue increasing and negatively affecting the inflation rate. Many stable countries were at a single-digit inflation rate, but by the end of this year, the inflation rate in most countries will be double digits. Smaller economies suffer from higher inflation rates, meaning life is getting harder for them. The third factor that might impact the future of cryptocurrency in Africa is the other developments happening across the globe. Apart from the negative aspects, other countries are figuring out ways to improve how they use cryptocurrency. Weeks ago, Belarus found a way to regulate cryptocurrency and ensure people do not use cryptocurrency to do things that are against the law. Such developments will help African countries ensure that cryptocurrency is being used for the proper purpose and help improve the African economy.
Possible Future
There is a high chance of cryptocurrency being adopted in more countries as a legal tender for transactions. Fiat currencies suffer from the many challenges that influence their value and use. The problem with fiat currency is that money can be printed easily and cause pain for the country in the future. Due to the number of recessions happening in the world, more countries in Africa and the world are printing more money and causing more inflation. Smaller countries are feeling the heat, so El Salvador and the Central African Republic have adopted Bitcoin and cryptocurrency as legal tender for transactions. As time passes, more African countries will understand the benefit of adopting cryptocurrency as a legal tender or in other forms. It will lead to rapid cryptocurrency adoption and regulation in many African countries. The second thing that may happen to many African countries is that when more countries in Africa see the Central African Republic’s benefits from adopting Bitcoin as a legal tender, they will want to duplicate the same in their countries. Many African economies are struggling, and the Central African Republic has shown and is leading the way to a prosperous African economy. The other reason that ties in with this is that countries that trade with the Central African Republic will need to legalize cryptocurrency to continue their relationship with the government. The process might be slow, but after a few months or years of using Bitcoin, they will realize that the technology has the potential to improve their economy. It will lead to more African countries legalizing cryptocurrency and increasing the adoption rate in the continent.
