Is Africa a crypto continent?
Africa is the most populated continent in the world. The 2016 African consensus recorded 1.216 billion people, but what does this mean for cryptocurrency?
According to Coin ATM Radar, there are only ten crypto ATMs in all of Africa, making it just 0.2 percent of the crypto ATMs worldwide. However, this doesn’t mean much because only 43 percent of the sub-Saharan population have a traditional bank account. Nonetheless, countries in Africa have been increasingly making strides with crypto.
There are 55 countries in Africa, and because of their banking infrastructure issues across the continent, crypto’s decentralized nature seems to be a good fit for a transition to a smoother trading system between the countries. Crypto is a digital currency not regulated by the government, which would help the inter-geographical issues they face; however, some disagree with this notion.
African countries have recognized crypto and some even have begun to use blockchain technology. For example, east-African country Rwanda has been in crypto news headlines. During the Transform Africa Summit 2018, the country’s president, Paul Kagame, spoke on how Rwanda doesn’t want donations but instead needs to have another revolution to find a way to tie technology, business and politics together to advance the country further.
During the summit, there were several speakers, such as Dr. Craig Steven Wright, an Australian computer scientist and self-proclaimed “Satoshi Nakamoto,” who believes that the continent needs to create a single, uniform crypto to unite the continent’s finances.
The Rwandan government is already using blockchain technology to digitize their land registry records by partnering with Microsoft and Wisekey. Other governments in African countries, such as Kenya and Uganda, have been spearheading the continent’s implementation of blockchain technology.
In Kenya, the government uses blockchain technology to oversee equitable distribution, but does not see crypto as legal tender. In 2018, the KeniCoin was launched with promises to its investors of receiving a 10 percent investment return every month. However, the Capital Markets Authority of Kenya, an independent market watchdog, stated that citizens should be wary of investing in the KeniCoin because of the company behind it, Wiseman Talent Ventures.
It’s been a long way, though, for the country to embrace crypto. Back in December 2015, the Central Bank of Kenya released a public service announcement which warned its residents of the use of crypto, stating that using such currency has its own risks and the bank and government can’t protect them.
Uganda’s government has publicly announced their implementation of blockchain and praised its use. Ugandan President Yoweri K. Museveni stated in May 2018 that he believes using blockchain will boost the economy in “critical areas,” such as the food, service and manufacturing industries. However, in February 2017, the Bank of Uganda also issued a public service announcement warning its residents of crypto use and strongly urged the citizens to only use licensed financial services.
“whoever wishes to invest their hard-earned savings in Cryptocurrency forms such as One-coin, Bitcoin, Ripple, Peercoin, Namecoin, Dogecoin, Litecoin, Bytecoin, Primecoin, Blackcoin or any other forms of Digital Currency is taking a risk in the financial space where there is neither investor protection nor regulatory purview.”
South African citizens were early crypto adopters and investors, with 70 percent of the citizens seeing crypto as an investment, according to a study by Luno. In 2018, the South African Reserve Bank (SARB) issued a statement that called crypto a cyber-token. In 2019, South Africa’s government is expected to publish a paper with research detailing the different aspects of crypto, such as investment pros and cons and what the tax implications would be.
The SARB issued a statement in December 2014 which warned that South African merchants can refuse to accept cryptocurrency as a form of payment because it’s not considered legal tender. Even though the SARB doesn’t see crypto as legal tender, it also doesn’t believe it poses any risks to the country and will apply “normal income tax rules” to those who use and declare crypto on their taxes.
Earlier in January, South Africa also released its first regulatory framework for crypto, called “Consultation Paper on Policy Proposals for Crypto Assets.” Created under the guidance of the SARB, the proposed legislation stated that all crypto payment systems, ATMs, exchanges, as well as custodial companies can continue to legally operate in the country, as long as they follow the government’s guidelines and requirements.
South Africa, along with 37 other countries, is a part of the Financial Action Task Force, a collective group that has plans to create governing regulations that oversee crypto, specifically trading platforms, in an effort to stop money laundering and terrorism in their countries.
Crypto to fill the gaps the banks didn’t?
Though the continent of Africa is currently experiencing traditional banking infrastructure problems, the use of cryptocurrency appears to slowly make its way to acceptance by governments of the different African countries. As it often happens, cryptocurrency quickly fills the gap followed by the demand of those nations, whom traditional banks abandoned.