Cryptocurrency carries risks and advantages for Africa

Pavithra Rao

Interest in cryptocurrency, a form of digital currency, is growing steadily in Africa. Some economists say it is a disruptive innovation that will blossom on the continent.

Cryptocurrency is not bound by geography because it is internet based; its transactions are stored in a database called blockchain, which is a group of connected computers that record transactions in a ledger in real time. The difference between cryptocurrency and, say, Visa or Mastercard, is that a cryptocurrency is not regulated by governments and doesn’t need middlemen. Transactions rely on the internet, which means they can happen anywhere in the world.

Among the cryptocurrency global brands, bitcoin leads the pack in Africa. Investors hope that bitcoin will become the new mode of financial transaction in the digital age.

“Africa is rarely mentioned among the largest markets for cryptocurrency. However, it may be set to steal a march over other markets,” says Rakesh Sharma, a business and technology journalist.

He says citizens of countries battling high inflation are likely to opt for cryptocurrency, because “cryptocurrencies offer an alternative to disastrous central bank policies”.

The main bitcoin countries are Botswana, Ghana, Kenya, Nigeria, SA and Zimbabwe, according to, a website dedicated to bitcoin news in Africa.

There will be 725-million mobile phone subscribers in Africa by 2020, according to the GSM Association, which represents mobile operators globally. That means more Africans will have the tools to plug into the cryptocurrency ecosystem, says Sharma.

That African governments are not now regulating cryptocurrency may be a factor spurring its growth on the continent. Rather than simply not wanting to, governments may be powerless to regulate cryptocurrency, the Nigerian central bank indicated recently.

It said it could not control or regulate bitcoin, “just the same way no one is going to control or regulate the internet. We don’t own it.”

Fearing a collapse of the banking industry or arbitrary appropriation of money by the government, Africans without access to banks and who live in politically unstable countries could be attracted to cryptocurrency. “Bitcoin transactions help to eliminate the procedural bottlenecks that plague traditional banking and financial services,” explains Emmanuel Tokunbo Darko, vice-president of marketing for, which hosts cryptocurrency tokens.

About 15 cryptocurrency-related operations began in Africa in the past year alone, reports Sharma. But South African-based Luno Exchange, established in 2013 and now boasting 1.5-million customers in over 40 countries worldwide, is the first to be based in Africa.

Others, particularly cryptocurrency-based remittance services, are popping up in various countries. These services include Abra, which operates in Malawi and Morocco, GeoPay in SA, BitMari in Zimbabwe and London-based Kobocoin, which was launched by Nigerian entrepreneur Felix Onyemechi Ugoji. Launched in 2013, Kenya’s BitPesa facilitates virtual remittance transfers to African and global locations.

Not to be left out, some governments are moving into the virtual currency terrain. Tunisia’s eDinar is a government-issued digital currency. Senegal is in the process of creating eCFA, which, if successful, could be emulated by other Francophone countries in Africa.

There will be government-issued cryptocurrencies in Africa in the near future, predicts Shireen Ramjoo, CEO of Liquid Crypto-Money, a South Africa-based cryptocurrency consulting firm.

SA’s central bank is actively studying cryptocurrency and may institute guidelines to foster innovation.

Some industry watchers refer to cryptocurrency as a risky and temperamental scheme, citing the crash to $8,700 in the value of bitcoin in February 2018, from a high of $20,000 in December 2017.

Without regulations, cryptocurrency is a double-edged sword; there may be gains from time to time, but any precipitous crash in price could leave investors with no escape route. Manasseh Egedegbe, an investment manager based in Nigeria, says that bitcoin’s frenzied prize surge seems like the dotcom bubble at the turn of the millennium.

Despite some analysts likening bitcoin and other cryptocurrencies to Ponzi schemes, many Africans are taking the risk of investing.

Experts such as Darko believe that African countries should warmly embrace the innovation.

“Truth be told, Africa needs blockchain technology and … cryptocurrencies more than any part of the world,” he says.

Africa Renewal

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