Cryptocurrencies are now more popular than ever before expected on the African continent. In 2020, cryptos grew by over 7% in five African countries of Nigeria, South Africa, Kenya, Egypt and Ethiopia. Africa’s low-income earning population claims the highest number of crypto traders in the past years, with millions of dollars being invested into the crypto market by the fourth quarter of 2021.
A major factor for this growth is attributed to the rigid nature of conventional African banks and the exorbitant transaction fees placed on customers. In addition, the economy of most African nations was hampered by the pandemic, and this brought great degrees of economic difficulties, causing a fall in most African currencies, which invariably shifted the majority of the continent’s population to trading in crypto.
With cryptos offering a substituted way of payment with ease and a stronger chance of growth in the future, trading in cryptos reached an all-time high on the African continent. The famous peer-to-peer features of the crypto market make it a suitable replacement to conventional African currencies; with a large number of Africans investing, purchasing and selling with cryptos.
Nonetheless, some Africans believe the continuous use of cryptos can be an innovation that’s just too good to be true. For clarity on the pros and cons of the crypto market and the future expectations of its continuous growth in Africa, we spoke to Chris Maurice, the CEO and co-founder of Yellow Card, one of Africa’s largest crypto exchange and a leading figure among experts in the cryptocurrency industry.
This work takes a detailed look at the cryptocurrency market in Africa and the future growth prospects through the eyes of Chris Maurice.
Crypto Adoption in Africa and the factors slowing down its progress
The African cryptocurrency market has developed over the years, with over a million users from the continent already. Chris asserts that the crypto market in Africa is already well-formed and is expected to keep getting better in the coming years. According to the Yellow Card’s founder, the African crypto market is currently the second largest in the world after Asia beating continents like Europe and North America.
“Crypto is not the future of Africa, it is the now!” Chris posits, stressing the fact that Africa’s crypto growth is sprawling currently, this trend has caused concerns among market regulators across the continent, brought about, largely, by the lack of a regulatory style for the crypto market.
The factors slowing down progress in the crypto market are mostly policies aimed at providing a more regulated crypto market in the continent rather than frustrating the efforts made by cryptocurrency users in continuing the growth of the crypto in the continent.
Scepticism of the crypto industry in Africa and the expectations of tighter regulations
In the years running down to the success of cryptocurrencies in Africa, African regulators have advised against its continuous trade. The height of the regulators’ warnings reached its peak when the Nigerian central bank banned the acceptance and trading of cryptocurrencies by financial institutions and commercial banks in 2021.
The fears that the unregulated nature of the market can lead to varying liabilities for the citizens and the nation were stressed by the regulators. Africa’s call to have a better-regulated cryptocurrency system has placed growing scepticism in the crypto industry.
on November 2022, the peak of this doubt was seen in the fall of the FTX, a Bahamas-based cryptocurrency exchange company owned by Sam Bankman-Fried, with daily revenue of over a billion dollars. FTX had fallen to less than a hundred million dollars in less than 10 days.
Chris acknowledged the fears held by players and various regulators in the crypto industry. He suggests that cryptos require a form of regulatory guidance to scale through the trusts of the continent’s regulators and the large users of the market.
“Yellow Card is presently licensed in 6 African countries…” Chris observed Yellow Card’s efforts in providing a better-regulated substitute for the African crypto market, which eventually assures the confidence of the various users of cryptocurrency exchanges in Africa.
On having tighter regulations, Chris while accepting that the crypto industry requires some form of regulation, countered that excessive regulations can be damaging to the overall free nature of the cryptocurrency, which in the first instance is what drags a majority of the African populace to trading on crypto in the first place.
The Yellow Card co-founder, attributed the fall in the FTX to the company’s capacity lack to carry up its former over billion dollars revenue market in a small nation. “…the Bahamas is a country with less than a 13 billion dollars economy, and the FTX is a cryptocurrency exchange making close to a billion dollar daily…” this gap is attributed greatly to the FTX’s fall than the lack of an excessive regulatory framework in the market.
The role of Cryptocurrency in the advancement of the African Continental Free Trade Agreement for a single market.
In April 2019, African states signed the African Continental Free Trade Agreement (AFCFTA), providing a single market for the trade of African products and services. AFCFTA promises to allow Africans to interact and trade quality products and services made in Africa among the nations in the continent.
Nonetheless, the confusion of the actual currency to trade products and services in the African free trade market has become a huge concern to experts, with some calling on the continent to adopt a single currency.
Chris insists Africa can leverage the cryptocurrency drive to advance the possibility of having a free trade single market. Cryptos can play a significant role as a single currency for trade accepted all over the African continent.
Yellow Card is making impacts to boost its presence in a majority of the African market, from South Africa to Botswana and over 50 countries, gaining licences and performing standard practices accepted by regulators and experts in the industry while maintaining a single currency for the continent’s free trade market.
The growth of cryptocurrency on the African continent cannot be overemphasized. With expectations of further growth in the coming years, the industry is set to become a strong competition to contemporary trading practices.
Following the crash of FTX, there’s been a fall in the confidence of cryptocurrency in the African market, nonetheless, these fears are addressed and have no relation to the overall functioning of the crypto industry.
Frequently Asked Questions (FAQs)
Nigeria currently is the largest crypto trading country on the continent despite the CBN’s ban on crypto trading in banks.
No, the AFCFTA does not expressly mention cryptos as an acceptable medium of trade exchange. Nonetheless, in the African Union’s 2063 agenda the adoption of technology for the overall impact of trade in Africa was identified.