Kenyans are leading the way in digital currency adoption by trading cryptocurrencies directly among each other, and other African countries are following suit. These markets protect cross-border businesses against fee-heavy remittances. A Chainalysis report, Global Crypto adoption index for 2021, ranks Kenya as the world’s most advanced country for peer-to-peer exchange trade. This study accounts for factors such as purchasing power per capita and the internet usage rate, among others. African Countries Adopting Crypto
P2P platforms are especially popular in Africa
Cryptocurrency remittances are another popular use case for P2P platforms, particularly in Africa. According to a Brookings Institute study, Africa received $48 billion in remittances in 2019. Of this amount, roughly half went to Nigeria. In contrast, most remittances are from Europe or North America. Banks in certain African countries restrict the transfer of cash, but P2P platforms allow customers to trade cash for cryptocurrencies, and then send their cryptocurrency to centralized exchanges. African Countries Adopting Crypto
Many P2P platforms are designed to help people who are unbankable or otherwise underserved by conventional banking products and facilities. However, most of these people are unfamiliar with P2P platforms and how they work. They may borrow money on multiple platforms without considering their ability to pay and are not careful about checking the terms and conditions. While lenders have to be careful about risk, P2P platforms are able to offer attractive loan rates.
Kenyan fintechs accept bitcoin as payment for services
Cryptocurrency usage in Kenya is limited. However, one fintech is using the digital currency to accept payments at a health spa in Nyeri, Mount Kenya. This spa has accepted bitcoin payments without encountering any legal issues or repercussions. Kenya has not yet regulated cryptocurrencies or recognized them as legal tender, but a few fintechs are making it possible for users to purchase bitcoin as payment for services.
M-Pesa, a mobile money payment service, has announced that it will waive the fee for transactions under $10. In addition, the company is expanding its merchant capabilities in Q1 2021, including allowing business owners to take orders via text, WhatsApp, or email. This move is a positive sign for cryptocurrencies in Kenya. It is a step toward making the digital currency a viable payment option.
Nigerian government bans cryptocurrency
The CBN has again banned cryptocurrency transactions in Nigeria. In a recent letter, the central bank of Nigeria (CBN) defended the directive, pointing to the anonymous nature of the cryptocurrency. Cryptocurrencies are issued by anonymous entities, and their creation requires the use of cryptography, which prevents oversight, accountability, and regulation. Similarly, other countries have banned crypto transactions. What is the reason for the ban?
The CBN issued a similar letter in 2017, but the CBN’s actions did not stop the popularity of the cryptocurrencies. Since then, cryptocurrency trade in Nigeria has increased by 19% a year. The CBN’s latest action is a weak response to a raging crisis that may have already occurred. In the meantime, Bitcoin is expected to remain a popular alternative currency in Nigeria. Despite the CBN’s efforts, the cryptocurrency market in Nigeria is far from over.
Costlier to send money in Africa
In recent years, cryptocurrency has made it cheaper to send money in Africa. This trend is likely to continue, with Bitcoin reaching a value of over 5,000 USD. However, it remains the most expensive continent to send money from the UK. In fact, it costs nearly twice as much as sending money from the UK to Tanzania. This is in part due to the vibrant digital and mobile money transfer services in Kenya, as well as the bank applications that make transferring money easier than ever.
While the number of cryptocurrencies has been steadily increasing over the last year, the average monthly amount sent to Africa via cryptocurrency has more than doubled in June. This is largely due to the increase in the number of financial traders in the region, and a general preference for crypto in Africa as a means to send money. Cryptocurrency payments can be highly efficient and reduce costs of sending money overseas. However, Africans may find it difficult to access banking services in their countries.