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Why Cryptocurrency Matters in Africa’s Quest for Economic and Financial Sovereignty



Cryptocurrency Matters in Africa
Image Credit: Bitcoins/Pixabay

In April 2019, Google Trends reported that Nigeria’s commercial hub, Lagos, had the highest Bitcoin search queries in the world. This poses the question: are Africans keen on finding an alternative to the incompetent traditional banking system? 

With over half of its adult population still unbanked, it is safe to state that the Bitcoin search queries were driven by frustrations triggered by the unavailability of financial services.

The volatility of African fiat currencies is also a threat to Africa’s financial and economic sovereignty. Cross border payments are a nightmare for Africans. Months ago, the South African Rand was named the world’s most volatile currency.

As the longing for foreign investments intensifies in Africa, currency volatility is still a major barrier. Some two decades ago, the “aid narrative” was the pattern of investment in Sub-Saharan Africa. Charities and NGOs only came to the aid of Africans, seeing that the continent had no room for self sustainability.

Although, it cannot be said that the need for aid has been totally expunged, the continent has been displaying potential, and investors are equally taking note. Africa is no doubt an emerging market and investors might just help catapult the emerging economy into a sovereign financial entity. However, liquidity and volatility issues must first be addressed.

The unstable currency does not only deter investments, but it also gives the Central Banks a hard time maintaining monetary stability.

Africa needs to give room for the rise of the digital currency era, in order to solve the issues that plague its financial ecosystem, and in turn, build a financial system where the holders of the currency are the owners of the financial infrastructure.

Cryptocurrency has the potential to replace the current economic system and governance in Africa. 

Several African countries already have start-ups and exchange in the cryptocurrency sphere. This has significantly improved cross border trading for these countries, and they are experiencing the bright pastures of a crypto world, as opposed to the dark traditional financial system.

The infrastructure for the adoption of cryptocurrency is somewhat ready for Africa. As it stands, Africa could leapfrog the current financial system before any other region. Although challenges of education and awareness are still existent, Africans already have some experience with digital versions of the fiat currency.

Cryptocurrencies are bound to create unprecedented opportunity for Africans to create and trade value. Similarly, inflation will be curbed easily, as cryptocurrencies will provide a stable store of value.

Financial inclusion is another area where  cryptocurrencies will play a big role in Africa.

1.7 billion people in the world do not have access to financial services. A large amount  of these people live in Africa. What are the implications? They live without being able to properly manage their finances, and the ability to obtain a loan, save or invest, is often ruled out. 

Denied the fundamentals of financial empowerment, these people, commonly known as the “unbanked”, are prone to inhumane standards of living. They face the harsh economic realities with no sustainable financial aid.

For low income earners who are also a majority in Africa, financial services are not feasible. The cost of these services could do more in crippling their finances, than upholding it.

Undoubtedly, financial inclusion is an important part of ridding poverty and boosting prosperity in Africa. If about half of the continent’s adult population still do not have access to financial services, the Sustainable Development Goals might be a mirage for a very long time.

While a large number of Africans are without financial services a good number of them have access to mobile phones. 

Last year internet users in Africa surpassed users in Latin America. 525 million Africans accessed the internet as of June of 2019. The numbers in Latin America fell slightly below this with 447 million users.

These numbers indicate the world is fast becoming digitalized and Africa isn’t left out of this race. In a world so technologically driven, Blockchain or DLT (Distributed Ledger Technology) could be the solution to Africa’s problems. 

When Bitcoin broke its way into the financial scene in 2008, there was a beacon of hope, as the traditional banking system wasn’t doing enough to help citizens of every corner of the continent.

Not only will Cryptocurrencies provide an alternative means of exchange, the unbanked will easily store and manage their finances without a bank account. 

A mobile phone with internet access is all that is needed to transfer, store and receive cryptocurrencies. A digital wallet can be created within minutes, without the traditional KYC (know your customer) procedure  that requires the physical presence of customers. 

However, Africa’s problems stem beyond fiat currency volatility or financial inclusion. The political realities in Africa also directly affects the finances of its citizens.

A nation riddled with war and political instability could displace individuals who would in turn, lose access to their finances and get stripped of their means of livelihood. With cryptocurrency, an internally displaced person or refugee, can easily gain access to all financial services, even in the face of chaos or crises. 

Beyond solving the problem of financial inclusion and cross border trading. Cryptocurrencies have the potential to give Africans the power to control their wealth without intermediaries thereby opening doors to a sovereign financial and economic ecosystem. 


Bolu Abiodun is a recent graduate of Theatre and Media Arts, Federal University Oye-Ekiti. A journalist with over a year's experience on the job. A former editor at American Media company Project Forward, he is a skilled content creator, social media manager and digital marketer.

Crypto Assets

Crypto prices drop as global market fear increases



Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.


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Bitcoin in Africa

The rise of CBDC in African economies



Many nations have taken cues from the world of crypto and its resounding successes over the last decade. In order to avoid getting left behind, governments worldwide are increasingly turning their attention towards implementing some form of digital currency, a CBDC which in full is Central Bank Digital Currency. Although inspired by cryptocurrencies, CBDC’s are quite different from traditional crypto platforms. The main differences are that CBDC’s are unlikely to be decentralized, the supply of this currency regulated by the host’s country’s central bank as the CBDC is designed to operate as a sovereign legal tender, the digitized form of the host country’s fiat currency. Thus, a central bank may issue digitized tokens of its currency of which their value is pegged to the fiat currency of the nation in question, making CBDC’s stablecoins.

Africa has seen a rise in the use of cryptocurrencies and it’s still pushing frontiers in this sector. Although the use of crypto in many African nations is becoming more and more pervasive by the day, the tone of governments in many of these countries toward the sector is cautious at best and threatening at worst. However, a few nations have voiced interests in creating digitized versions of their legal tender to function as a CBDC. Amongst these are Ghana, Nigeria, Morocco, Kenya and Tunisia.

Many of these projects are still in the research phase or developmental phase however. A good example is Ghana’s proposed CBDC, the E-cedi being developed in partnership with German company, Giesecke + Devrient. Nigeria’s CBDC project, the eNaira has been announced and according to Nigeria’s central bank, this CBDC will be launched sometime in 2021. To that end, the CBN has partnered with fintech company, Bitt Inc. to serve as the technical partner in the eNaira’s development. Reportedly, the CBN had made the decision to digitize the Nigerian Naira in 2017.

While the pursuance of digital currencies in African nations is a welcome development, implementation of these schemes isn’t without challenges. Chief among the issues countries in Africa face would be the already existing financial service inequality and poor penetration of internet access in the continent. These challenges must be tackled in order to allow for mainstream adoption of CBDCs and the subsequent provision of financial inclusion. The benefits largely depend on the peculiarities of the nation deploying them. For instance, a digital currency is thought to help Nigeria increase foreign remittances, it’s second largest source of forex after oil. Whatever the outcome of these projects, it is becoming apparent that CBDC’s have come to stay.

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Decentralize Brief

Bitcoin trades above $51k ahead of El Salvador’s adoption



Bitcoin growth

Bitcoin price has rallied above $51,000 ahead of El Salvador’s adoption. The immediate surge in price may be due to the social media campaign that everyone should buy sats of Bitcoin to support El Salvador’s plan to make the coin a legal tender or it may be due to the news of El Salvador’s adoption of the coin as a legal tender on September 7. Users of social media platforms like Twitter and Reddit are discussing how they will buy Bitcoin of $30 each to mark the new El Salvador Bitcoin law.

The surge in Bitcoin’s price began in the last 24hrs with the price rallying around $51,955 with a 3.37% increase. This is an all-time high after the April crash that brought the price of Bitcoin from $64k down to $28k. The move by El Salvador to be the first country that accepts Bitcoin as a legal tender and the social media campaign that leads to a surge in price ahead September 7 are a repetition of events that occurred late last year and early this year with regards to institutional investors and how the price of Bitcoin skyrocketed.

El Salvador, a country in Central America, has been preparing heavily to adopt Bitcoin by installing ATMs to allow citizens to convert the token into US dollars. Last week, the country’s Legislative Assembly passed a law to allow for the creation of a $150m Trust to support the conversion of Bitcoins to US dollars.

To promote the use of Bitcoin, the government states that it will give the adult population of El Salvador $30 in Bitcoin once they download “Chivo” the wallet issued by the government. This was confirmed by the Finance Minister, Alejandro Zelaya.

What this means for Bitcoin investors

Apart from the adoption by Salvadorians, on-chain analytics show that Bitcoin is in high demand. The fourth halving that occurred will make Bitcoin become a scarce token in the nearest future. Thereby increasing the price sporadically.

With El Salvador’s interest in Bitcoin, other countries are likely to follow suit- Panama is considering following El Salvador’s lead. History will repeat itself as this development will serve as another crypto rout that occurred early this year when Tesla and MicroStrategy announced their support for Bitcoin.

El Salvador’s new law allows the use of Bitcoin as a legal tender it can be used to buy goods, pay for taxes and bank loans. This means more demand for Bitcoin, with the fourth halving that occurred, it means less supply. A common rule of economics for demand and supply will apply. Prices are projected to keep rising. At the time of writing this report, Bitcoin is trading at $51,839 with a projection of $52k before the end of today and higher tomorrow when Salvadorians begin to use the token.

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