How crypto will change banking in Africa

Africa is a relatively untapped goldmine as there are tons of opportunities that are yet to be fully explored. Smart investors can see this and are continuously pouring huge sums of money into the continent. The infusion of crypto into Africa’s banking sector is an opportunity that is yet to be fully explored. Though the crypto movement is relatively new when compared to other financial markets like forex and stocks, it has had a notable impact on the banking and financial markets globally and in Africa inclusive. Africa’s banking is still largely cash-based but there has been an increase in the use of digital payment systems within Africa, especially in the sub-Saharan region.

In Africa, crypto is currently opening new ways for small and medium-sized businesses to get easy access to investors’ funds. Also, we believe cryptocurrency is not just a temporary wave that will soon disappear but a permanent solution to long-lasting challenges posed by traditional banking systems. Crypto users in Africa will likely continue to increase as digital payments are gradually becoming preferred to cash payments as it saves time and is so easy even from a mobile phone.

The Present Role of Cryptocurrencies in African Banking

Early adopters in Africa have decided not to be left out of the crypto move which is the latest innovation in the world of money. According to a policy brief by a United Nations agency known as UNCTAD, Cryptocurrencies are becoming increasingly popular in African countries. A notable percentage of some African countries are currently using digital currencies as a means to bank their money. According to the policy brief, the percentage of crypto users as of 2022 in Kenya is 8.5%, in South Africa is 7.1% and in Nigeria is 6.3%. Another African country known as the Central African Republic has made a bold move and has adopted bitcoin as a legal tender, after this announcement all south african forex brokers increased the purchasing price of Bitcoin following the market’s trend.

Crypto in Africa has real use cases as digital currencies currently address a number of economic challenges in the African region, especially in sub-Saharan Africa. One notable use case of crypto in Africa is the reduction of financing challenges for micro, small and medium-sized enterprise sectors to give easier assess to investment funds. According to Chainalysis, $562 million worth of investment remitted in sub-Saharan Africa was done via popular cryptocurrencies like Ripple. As financing is a major challenge in Africa’s business and housing sector, easier access to investors’ funds through crypto crowdfunding is definitely a much-needed innovation.

Apart from businesses that are using crypto to get investment funding, individuals are also using crypto to facilitate personal banking transactions. Among the crypto-savvy population in Africa, it is not uncommon to see people use crypto to accept payments, especially from international clients or employers. Due to rising inflation, some crypto users even store their wealth in stable cryptocurrencies like USDT to preserve the value of their money rather than leaving it in their local currency. Also, some experienced and smart investors in South Africa (and other African countries) are involved in crypto trading, and the best crypto trading platform in South Africa is likely Exness.

See more: Overcoming the treasury challenges of operating in Africa

How Crypto will Change Banking in Africa in the Future

Africa’s banking is still heavily dependent on cash but digital payments are slowly taking over the region’s banking, especially in the cities. Cryptocurrency is a notable part of digital payments in Africa but no one can know for sure the future of cryptocurrencies in the world and Africa inclusive. Corruption within some African governments has resulted in a lack of trust in the government by its citizens. Perhaps, this is why the launch of Nigeria’s national digital currency called the e-naira was not well-received by its citizens.

Mobile payment is currently a crucial part of Africa’s traditional digital banking. This is due to the convenience and easy accessibility even in remote villages where the internet is not available. Some of the challenges of the traditional banking system are the heavy reliance on third-party payment intermediaries and the lack of full transparency on transaction details. Hence in the future, crypto will most likely be the chosen platform for many peer-to-peer transactions among Africans. As more people in Africa continue to adopt cryptocurrencies, the power of the government to create arbitrary laws in the banking sector will be slowly eliminated. It can be very annoying to have unnecessary sanctions and restrictions over your bank account just because the government feels they can do anything they feel like. 

In addition, crypto is a solution to the financial insecurity currently experienced in Africa’s banking sector. The intense security of the blockchain makes it almost impossible for hackers to have access to people’s funds without the wallet seed phrase. The security, transparency, and easy accessibility of crypto will most likely be the key influencers of Africa’s banking in the years ahead.

On the Flipside

The future of crypto in Africa’s banking sector is full of opportunities but there is a possibility that the growth of crypto in the region’s banking might be a road full of toils. Crypto threatens the sovereignty that some African governments currently enjoy as they don’t have access to control and place unnecessary restrictions on citizens’ crypto earnings. Hence, the fight against crypto adoption might be so fierce and maybe even enough to stagnate the growth of crypto in some African countries.

It is evident that crypto will continue to shape the future of banking in Africa. The question is, what future will crypto actually create in Africa’s banking sector? It is a valid concern that crypto may end up being the safe haven to hide away illegal funds as it is possible to create a crypto wallet that no one knows the actual owner of.

Why Should You Care

As a crypto enthusiast, you may or may not reside in Africa. This does not matter as crypto is a global change in the world of money and even if you don’t live in Africa you may want to invest in businesses that promote crypto adoption in Africa. A business idea as simple as educating Africans on how to buy crypto could turn out to be a great investment if managed properly with the right business skill set. 

If creating a business around crypto in Africa does not interest you, simply investing in popular cryptocurrencies and keeping them for the long term might be a smart investment decision. Of course, you probably should not place all of your life savings into crypto investment or trading. Remember that cryptocurrency is here to stay, do not be left out.

Source: Analytics Insight