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Financial Inclusion in Africa: Can Crypto Bridge The Gap?

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Image credits: Guardian.ng

Did you know that over one billion people in the world still don’t have access to financial services? In Africa, for example, a large percentage of its population still lacks access to basic financial services. In spite of this disturbing exclusion in vast sections across the continent, Africa’s population is increasing at a geometric rate. In Sub-Saharan Africa alone, it is estimated that by 2050, the population would be doubled.

The rapid population growth on the continent, has however, not translated into an improved economy for the people. The economies of African countries, still lag far behind, when compared to those of other countries of the world. Access to improved livelihood for many people still remains nothing but a dream.

Crypto and its underlying blockchain technology, come at a time where this long-standing challenge persists. As such, it holds potentials of constituting a viable tool to help achieve full financial inclusion on the African continent.

Following this backdrop, this article analyses how cryptocurrency can help reduce financial exclusion in Africa, amidst the ravaging population explosion and deeply-rooted poverty on the continent.

The constraint to financial inclusion

As a developing continent, Africa has enjoyed massive development in recent decades. The adoption of web and mobile technology has greatly transformed the continent. For example, the emergence of mobile money has further broadened improved access to financial services.

While these come as an improvement on the outdated infrastructure, this development, however, masks a stark reality: that a sizeable number of Africans, still lack access to basic financial services.

The current financial system in the continent, is largely under-developed and limited in reaching extremely remote areas. Similarly, opening and managing a bank account in Africa is still expensive. As a result, many African adults still use informal means to save and borrow money.

Daily contribution booklet still used in Nigeria, West Africa
Image Credit: Olist / Lady K Abefard

Financial institutions still make use of some hectic processes—such as strict account opening processes and opening fees— which often reduce the thirst for the adoption of ultramodern financial services. Owning a cryptocurrency, however, does not require all these.

A 2014 Global Findex survey, highlighted four common barriers as to why people do not have a bank account. These barriers are:

  • Lack of money.
  • Account opening being too expensive.
  • Financial institutions being too far way.
  • Lack of necessary documentation. 

These barriers are particularly toxic to the health of the African economy, as they hinder access to credit. Getting financial support has always been a major obstacle for individuals and Small and Medium Enterprises (SMEs) across the continent. Compared to developed countries, African entities often find it difficult to get loans or adequate access to other sources of funding.

As such, there is an urgent need for more financial innovations in Africa.

The path to inclusion

Financial inclusion removes the barriers to cheap and quality financial services, and also broadens access to services ranging from credits to cross-border payments.

In order to achieve financial inclusion, financial products/services need to remove the constraints that restrict people from participating in the financial sector. This way, more individuals and businesses—like the Somalian teacher and the small scale Zambian Cement Company—would be allowed to thrive in a financial environment that encourages them to engage actively in the economy.

Furthermore, a study carried out by GSMA, shows increasing smartphone and mobile usage in Africa. With such an improving connectivity profile, this scenario could provide an ample opportunity for mobile-based financial products to change the narrative of financial exclusion in Africa. This is where cryptocurrency comes in.

Whilst there are divided opinions and mixed perceptions on whether cryptocurrency is needed in our society, a close scrutiny of cryptocurrency, would immediately give away the endless potentials it holds to address critical issues such as financial inclusion in developing locations like Africa.

Blockchain-based products like cryptocurrencies, have an open financial system which allows anyone to participate. Essentially, there are little or no costs involved in holding or getting access to cryptocurrencies. The ripple effect of this is that most barriers attached to banking with traditional financial institutions, are bypassed. This would, in turn, considerably boost financial inclusion.

Similarly, all it takes for one to be jolted to the harsh reality of the deep financial exclusion that exists in Africa, is a trip to North-Central Nigeria. There, in areas like the Maikunkele–Zungeru Road in Minna, Niger state, one would have to travel for at least, 30 minutes in order to gain access to an Automated Teller Machine (ATM). The availability and reliability of financial services, still pose a huge threat to financial inclusion on the continent; notwithstanding the continuous efforts of governments and private organizations. On the contrary, cryptocurrency transactions can easily be conducted within seconds, and with a mobile device. This eliminates inadequacies triggered by limited availability. In turn, largely available and cost-effective financial services would be provided to the millions of Africans who are currently unbanked; thereby, boosting the economies of countries on the continent.

In conclusion, evidently, cryptocurrency is a viable tool for the promotion of financial inclusion in Africa. However, African governments still need to discard their suspicion and lack of support for cryptocurrency. Should this be achieved, Africa would be well on its way towards becoming a global economic giant.

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Africa Blockchain Institute

Africa Blockchain Institute Organized The First African Blockchain Summer Bootcamp For Teenagers In Ghana

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In the spirit of catching them young, the Africa Blockchain Institute organized the first-ever Blockchain Summer Bootcamp for teenagers (age range 13 to 19 years old). A successful Bootcamp, according to the participants’ testimonials and stakeholders, held at the OpenLabs, Ring Road, Accra Ghana, between Monday 2nd August, and Friday 6th August 2021. 

The teenagers applied from across Africa, and selected participants all converged at the OpenLabs, Ghana, for an intensive five days of learning, interacting, and implementing personal  Blockchain projects. The participants were divided into three significant tracks, thus; Blockchain Development, Blockchain for Creatives and Blockchain Entrepreneurship. 

Blockchain Summer Bootcamp for Teens by ABI
Blockchain Summer Bootcamp for Teens by Africa Blockchain Institute

Across these three tracks, the teenagers learnt introductory units to Blockchain Development for societal challenges, Blockchain evangelism, Non-Fungible Tokens, and how Cryptocurrency works. Another highlight of the program was the excursion to the Accra Digital Centre, where the Boot Campers were introduced to the tech ecosystem and feel of the Ghana Tech Lab and Accra Innovation Hub spaces. A visit was also made to the Museum of Science and Technology, and the teenagers got to understand the history of technology in Ghana. 

Worthy of mention was the panel session aimed at motivating the students to pursue a career in technology. While making his comments during the panel session, the founder of BankLess Africa, Mr. Muntala Mohammed Shaibu, urged the teenagers to stop seeing themselves as too young to experiment with new technologies. In her remarks, Ms. Elohor Thomas, CEO & Co-Founder of CodeLn, urged the teenagers to continue to explore their interest in technology and blockchain early.

Blockchain Summer Bootcamp for Teens by ABI
Panel Session, Blockchain Summer Bootcamp for Teens by ABI

The Bootcamp ended with personal project presentations from the Blockchain Development and the Blockchain for Creatives & Entrepreneurship tracks. Projects such as NFT blogposts, Blockchain product reviews and Blockchain for transport and logistics were presented. The best presentation won the OpenLabs scholarship for Robotics Course. Thanks to Dr Sujith Jayaprakash, the Director of OpenLabs, Ghana, for the offer of scholarship. In his closing remark, the Executive Director of the Africa Blockchain Institute, Mr. Kayode Babarinde, urged the teenagers to continue using the  skills and knowledge gained during Bootcamp to explore Blockchain-related solutions further. We also appreciate Mr. Ganzaro Omar, Chairman, AfroBlocks, for his supports, and fostering collaborations with the Ghanian Blockchain community.

The Africa Blockchain Institute will continue to hold future Blockchain Summer Bootcamp series in various African cities to drive Blockchain knowledge into innovators early enough. 

Oluwaseun David ADEPOJU

Head of Research,

Africa Blockchain Institute. 

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CBN Crypto Ban Increases P2P But Is It Also Increasing Crypto Scams?

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Crypto ban

The Central Bank of Nigeria CBN on the 5th of February 2021 caused an uproar within the crypto community in Nigeria and globally. The Apex bank released a circular that prohibits financial institutions from processing crypto-related transactions. Banks and other financial institutions were also directed to close accounts that made crypto-related transactions.

As expected the directive did not sit well with crypto enthusiasts, traders and most Nigerians alike. In the CBN’s defence, they were protecting Nigerians from crypto-related scams, volatility of the crypto market and several evils perpetrated with cryptocurrencies. Though valid reasons, many Nigerians still express their resentment of the directive. Cryptocurrencies which serve as an alternative to the weakening Naira are faster and easier at facilitating cross border transactions. 

However, the ban has not hindered crypto transactions in the country. The country still ranks high when it comes to crypto transactions globally. Business Insider reports that between January and March 2021,  p2p trading value of bitcoin in Nigeria was worth $99.1 million. This is $9 million more than the value of bitcoin p2p transaction in Kenya for the whole of 2020. Cleary p2p has increased significantly since the ban. It is therefore safe to say that the ban has increased crypto activity in Nigeria. But has it increased crypto scams too?

The dark side of p2p

While volatile nature cryptocurrencies might in truth lead to loss of funds, the ban by the Central Bank of Nigeria could make Nigerians more vulnerable to crypto scams as they now purchase these digital currencies from unregulated sources hence, p2p.

“It was very easy just buying bitcoin straight from the Luno app but now I need to find someone who is willing to sell me bitcoin and there is really no way to ascertain the person’s trustworthiness.” This statement by crypto newbie, Adekunle Agbetiloye sums up the troubles and vulnerabilities crypto newbies go through to buy and sell crypto assets.

Kunle has been fortunate to have friends that are more grounded in trading cryptocurrencies. This has prevented him from falling into the hands of scammers that find newbies like him, easy picking. In his words “I know people that have fallen victim to crypto scammers that is why I only transact with people that I know personally”.

Ezekiel Juwon wasn’t lucky enough to buy from someone he knew personally. He recounts how he unsuspectingly sent money to a crypto scammer. In his words, “as a beginner I think it is more convenient to buy directly from crypto apps than dealing peer-to-peer. As someone who has experienced crypto scams first hand, I know this for a fact”. Juwon also adds that regulated p2p platforms created as an alternative to trading crypto can also be dangerous. He is convinced that more people will suffer his fate if the ban isn’t lifted. “Everyone wants to get in on crypto, it saves you from poverty so the ban just makes newbies vulnerable”. 

Just like Adekunle, Oyin Komolafe is fortunate to be surrounded by crypto veterans. She says “aside from the grace of God, what is helping me is that I am surrounded by people who know their way around crypto. However, I am sure that newbies will be susceptible to crypto scams because of the CBN ban”

What experts have to say   

However, Crypto expert and blockchain stakeholder, Samuel Attah feels crypto platforms have created alternatives that should keep crypto newbies safe. He sights Bundle as an example of these platforms. In contrast, some of these new users have said they do not find these platforms easy to use. 

Another crypto trader who identifies himself simply as Smogz, says these alternatives by crypto exchanges and crypto platforms require a lot of expertise. Smogz believes that the ban will increase crypto scams. “Crypto platforms serve as a shield to protect crypto beginners from scams. Now that these beginners have to look outside of the confines of these platforms they are open to being ripped off”

It is clear the crypto ban cannot stop Nigerians from using cryptocurrencies. Although a risky investment venture, crypto assets are known to be a source of wealth. Ensuring the safety of Nigerians while they use these crypto assets should be a priority.

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Bitcoin in Africa

Crypto Wallets: A Major Hurdle To Crypto Mass Adoption – Interview with Francis Obasi, Lead Wallet CEO

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Image Credit: Lead Wallet / Twitter (Image was modified)

Cryptocurrencies are getting more popular each year, but mainstream adoption and usage of digital currencies and assets are nowhere close. According to Buy Bitcoin Worldwide, 1.3% of the world’s population uses bitcoin. While a great number of people might know about cryptocurrencies, very few people own or use them. 

For Francis Obasi, the CEO of Lead Wallet, a  major obstacle to crypto adoption is the ability to create and simply use a crypto wallet. Whether trading, staking or hodling, owning a wallet is the basis of transacting in crypto. This is why Francis has created an app that he believes will help people enter the crypto ecosystem seamlessly. 

The idea behind Lead Wallet 

Before Lead Wallet, we were a group of community managers working for AmaZix. One of the most frequent questions we got then as community managers are “where will I store my cryptocurrency, which wallet is the best wallet?” We most times recommended Trust Wallet, we would explain the process of setting up the wallet. Unfortunately, some of these crypto newcomers fall victim to impersonators. For example, someone would impersonate me and tell people to disclose their private keys. People were getting scammed off their cryptocurrency and it became a concern for me. 

Consequently, I realised that the bridge between conventional finance and the crypto space is a digital wallet. To interact with anything crypto-related you need a crypto wallet. So the crypto wallet is a very important factor in understanding what cryptocurrencies are and keeping new users safe. It is their first point of contact when they choose to enter the crypto ecosystem. 

However, a lot of crypto wallets are not simple enough for new users. We decided to create something that will not seem strange to people who are already used to bank applications (which are simple to use).In essence, a crypto wallet bridges the gap between conventional finance and decentralized finance. 

We chose the name “Lead” because we were building something different from what is considered the norm within the crypto ecosystem. We were setting a new standard, a wallet that will “Lead”  the crypto mass adoption. 

What a simple crypto wallet should look like?

A good wallet should reduce a user’s journey in performing simple tasks such as sending and receiving cryptocurrencies. Inside Lead Wallet, there is an ostensibly placed “send” button. Rather than having too many steps to simply sending cryptocurrency, it should not be more than four. In fact, doing most things on a crypto wallet should not take more than 4 steps. 

So no matter how uninformed one might be about cryptocurrencies, using a crypto wallet for the first time should be easy. 

Owning your own private keys

Owning your own private key means that you are in control of your crypto assets. The saying “not your keys not your coins” explains it well. A private key is an alphanumeric string that is generated at the creation of a wallet. 

Having your own private keys means you are in charge of your own crypto asset. A wallet like Trust Wallet or Lead Wallet gives you power over your own crypto assets, it is a decentralized wallet. However, unlike Trust Wallet that stores all crypto assets within one private key, Lead Wallet creates a unique private key for each crypto asset. This gives users the ability to export wallets to other platforms such as Trust Wallet. 

Decentralized crypto wallet is the gateway to DeFi

Decentralized Finance, known for short as DeFi, is a disruption to the traditional financial system. DeFi gives everyone a chance to enjoy financial services without the bottlenecks that come with traditional or centralised financial services. 

Savouring the fruits of decentralized finance requires a decentralized crypto wallet that can connect to a web 3 browser. Like Lead Wallet, such a wallet should offer a very user-intuitive web 3 browser that helps them interact with DeFi applications. Lead Wallet provides these apps as bookmarks to protect users against malicious links. 

There is a lot going on in the crypto world, a lot of people genuinely want to be a part of it but there’s a lot they do not know. A crypto wallet which is most likely their first point of contact with the crypto ecosystem should simplify things for them. 

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