Recently, Africa has shown to be a fertile ground for Cryptocurrency with several countries such as South Africa, Kenya, Ghana, Zambia, Nigeria and Zimbabwe among others embracing its adoption.
There are several reasons to this boom.
One of them is the fact that African governments no longer impose stringent regulations to Cryptocurrency. This might be attributed to the inability to regulate this currency as recently indicated by the Central Banks of Nigeria and Kenya. However, it is still not clear whether the same trend will be sustained in future.
Another factor spurring this growth is the fear for a probable collapse of the African banking industry or arbitrary appropriation of money. In such a case, Africans are gaining interest into Cryptocurrency due to their fear to be unable to access banks and political instability that might result in loss of money; hence, the need for a secure option.
The rationale for this enticement is based on the hypothesis that transactions related to Bitcoins eliminate the procedural bottlenecks that plague traditional banking and financial services. However, this assertion is yet to be confirmed and if proved solidly and concretely, then a further looming growth in Cryptocurrency should be expected shortly.
Additionally, most governments are opting for the virtual currency. A good example is Tunisia’s eDinar, which is a legally government-issued digital currency. Also, Senegal is in the process of creating eCFA, which, if successful, could be emulated by other Francophone countries in Africa.
As such, it is apparent that there will be government-issued Cryptocurrencies in Africa in the near future, given the fact that money transfer will be cheaper and with no intermediaries since every single computer device on the surface of the planet with an internet connection will be able to access blockchain and transact.
As of writing this, only two countries look favorably on crypto: South Africa (see the article “Bitcoin to Rand – Bitcoin market Guide South Africa”) and Swaziland, and only one has banned it: Namibia.
By the way: There are many reasons for inward remittances, one of the most common causes is the ability of the people living abroad to support family members, e.g. to study (see article about how to get a bachelor’s degree)
Benefits of using Bitcoins over Azimo and WorldRemit
Freedom of payment is a fact that is encouraging most Africans to embrace Cryptocurrency, given the various limitations that bank imposes such as rescheduling payments and closing business during holidays.
Bitcoins allow freedom payments just like other money transfer service providers such as WorldRemit and Azimo, which collaborate with services like Mpesa in Kenya to ensure convenient funds delivery to recipients. However, Bitcoins is more flexible to an extent that it allows users to be in control of their money since there is no central authority figure in its network, unlike the case with Azimo and WorldRemit.
Accordingly, users are assured of security and safety of their money. The fact that there are no intermediaries in the Bitcoins network protects consumers from fraudulent merchants who charge extra fees on transactions.
Also, user information is protected from identity theft since payments can be made without embedding personal details to the transaction; unlike it is the case with Azimo and WorldRemit, which requires both the sender and recipients to provide their details for the transaction to be finalized.
Bitcoin facilitates information transparency by availing information about finalized transactions so that anybody can see. An important point to remember is that this does not subject personal details to theft since they are treated anonymously. Only a user’s public address is visible. Besides, the Bitcoin protocol is immune from manipulation, given that it is cryptographically secure.
Another benefit is that transactions are done free of charge, or if there is any fees, then it is insignificant to the user, unlike it is the case with Azimo and Worldremit. However, a user may decide to include some fee to the transaction for quick and effective processing. The reason for lower fees associated with Cryptocurrency is the fact that digital Currency exchanges help merchants to process transactions by converting Bitcoins into fiat currency.
Also, merchants are subjected to low risks since Bitcoins transactions are irreversible, and don’t have private personal information that might provide loopholes to fraudsters. In this regard, Bitcoins allow merchants to transact even in situations coupled with high fraud rates and crime rates, courtesy of the public ledger, well known as that makes cheating or conning others difficult.
For example: The situation of cryptocurrency in Kenya
As seen earlier, Cryptocurrency is gaining a rapid growth in Africa. There is no single African government that has managed to unravel the best approach that can be used to regulate Cryptocurrency.
In Kenya, legislatures tasked the Treasury in July this year to determine whether Cryptocurrency should be regulated or not. This came in after realizing that there were so many bitcoin transactions going on without being taxed or licensed. Their argument is based on the fact that the State might be losing a lot of revenue in terms of untaxed and unlicensed activities.
As such, the situation is still uncontrollable, not forgetting that there is a lounge at Kenyatta University, an ATM in Nairobi City and a Hotel in Nyeri County that trade in Bitcoins. The Cabinet Secretary in charge of the Treasury, Mr. Rotich, had no option, but to admit that many Kenyans do have more interest in Cryptocurrency, adding that he would look into the case as to whether there are crypto exchanges operating in the country or not.
However, he was not sure about the existence of local Bitcoin exchangers in the country, a fact that further prove how hard it is to regulate Cryptocurrency in Kenya. Mr. Rotich added that it is only after establishing the availability of local exchangers and ascertaining the risks associated with Cryptocurrency that the Central Bank of Kenya could determine the best decision as to whether to regulate this form of currency or not, since so far, there is no evidence showing that Cryptocurrency is risky and can result in losses.
According to the Cabinet Secretary, the decision to support or not to support Bitcoins can be equated to embracing technology or killing it, a notion that somehow, shows his support to Cryptocurrency.