How Crypto is Solving Africa’s Money Problems

Africa is a life-filled continent that is full of ideas and opportunities. Years upon years, however, money troubles have kept us back. Problems such as inflation, absence of banking facilities, high cost of international remittances and weak local currencies are complicating the situation as people find it hard to save, invest or even remit money to their family members. I, being a Nigerian, have also witnessed the impact of these issues in the day-to-day lives. However, in the recent past, there has been a new twist to the tale and this is cryptocurrency. To resolve these historical financial issues, increasingly Africans are adopting digital currency such as Bitcoin, Ethereum and stablecoins.

Inflation is one of the largest money issues in Africa. The local currencies continue to depreciate in value in most countries. Indicatively, in Nigeria, naira has lost a lot of its power with the dollar. This implies that the amount of money in the hands of the citizens purchases less annually. The same occurs in such areas as Zimbabwe, Ghana, and South Sudan. In a currency which continues losing value, it becomes pointless to save money. However, with crypto, a good number of Africans are escaping. They can secure their wealth by purchasing and holding the digital currency like Bitcoin or stablecoins (linked to the U.S. dollar). Actually, I have friends who would rather save their money in crypto wallets rather than in banks.

Inaccessibility to banking is another major issue in Africa. There are millions of Africans who lack a bank account. Banks are distant and inaccessible in the rural areas. In cities, it is even stressful and paperwork-intensive to open a bank account. Without banking, individuals are unable to save correctly, borrow funds and easily make payments. Cryptocurrency is addressing this issue since all one requires is a phone and internet connection. A basic crypto wallet application enables any person to send, receive, and store funds without having to pass through the bank. This makes those who were previously locked out of the system financially free.

The other significant problem that crypto is fixing is sending money across borders. The Africans have to either remit money back to families in other countries or receive remittances. However, interbank/money agent international transfers are quite costly. In this case, it could take up to or more than 15 dollars to send 100 dollars in Europe to Africa, and it can take days as well. Using cryptocurrency, the identical amount of money of 100 dollars can be delivered in real-time at minimal costs. This explains why a large number of Africans in the diaspora are presently sending money home through crypto. It saves time, money and it goes straight to the wallet of the receiver.

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The second area that is being assisted by crypto is in the business and trade. Most businesses in Africa struggle with international trade since they do not have easy access to the foreign currencies such as the dollar. Banks are known to be notorious in terms of delays and high charges to the importers and exporters. However, with crypto, one can pay suppliers or get payment across the borders without having to use complex systems. To illustrate, a trader in Lagos can remit a supplier in China with the help of stablecoins and the transaction will be completed within minutes. This is opening new frontiers to the entrepreneurs in Africa.

What I consider to be of great interest is the fact that crypto is providing young Africans with earning opportunities. With the help of freelance jobs, online companies, and even crypto trading, a number of young people earn money that could be made unattainable previously. Services, such as Upwork or Fiverr usually charge in the form of dollars, and using crypto wallets, freelancers will be able to get their payments quicker and at a lower cost than the bank could. I have witnessed friends who have now become financially stable due to the possibilities presented to them by crypto.

Nevertheless, together with numerous issues crypto is addressing, it has its own problems in Africa. Government restrictions are one of them. There are instances where some African governments (such as Nigeria at one point) imposed prohibition on supporting crypto transactions by banks. They are afraid of such problems as fraud, money laundering, and loss of control over the financial system. However, with these limitations, Africans have still been able to trade crypto using peer-to-peer. It indicates that the demand is high and it cannot be easily deterred.

Lack of awareness and scams is another problem. Cryptos are still novel and thus not everyone is conversant with the working principles of crypto. This has enabled people with illegitimate motives to exploit innocent individuals with their bogus investment plans. Education is extremely necessary to ensure that individuals can use cryptos without being defrauded.

Nevertheless, the African positive aspect of crypto is stronger. It is being reported that Africa is among the fastest-growing areas in terms of cryptocurrency adoption. Nigeria, Kenya, South Africa and Ghana are the countries that are in the lead. Youths are spending crypto to meet their daily demands even in smaller countries. This is an indication that crypto is not a luxury, but it is a real solution to real issues on the continent.

Cryptocurrency may become even more prominent in the development of Africa in the future. More individuals will trust and use it in case governments develop friendly and transparent policies. Moreover, with the increase in the internet penetration and the low cost of smartphones, the number of Africans who can access the digital economy will be on the rise. Through crypto, we can envision a situation in which we will no longer be hindered by inflation, high transfer costs, and banking issues.

Finally, it is worth noting that money issues in Africa are not new, and crypto is making a difference. It is assisting individuals to combat inflation, providing unbanked with finance, reducing the cost of cross-border payments, and offering new opportunities to the youth. Still, such issues as scams and governmental restrictions remain, but the rise of crypto in Africa proves that the population is willing to change. Being a Nigerian, I think that in case we approach this technology intelligently, crypto can actually reinvent the nature of money in Africa and allow us to create a more prosperous financial future.