Cryptocurrency Rise in Africa

Crypto-currencies have been nascent in the world and nowhere is this uniquely evident than in Africa, especially when you consider the inefficiencies that have been there in Africa, whether there are payment, political, regulatory or socioeconomic.

When Bitcoin-on-the-Blockchain was invented, laying down the path of the cryptocurrency boom that was to be had, it was left to the imagination how far it would go. Where Africa has had historical inefficiencies, it also is at the heart of technological advances, especially with the Kenyan MPESA that presented to the world a system of payment that had been unprecedented.

While it was at the control of Safaricom, it, however, opened up the country in a way that set the stage for today, where more than 40% of Kenya's GDP passes through the platform.

One can only begin to conceive of ways how crypto-currencies and the technology can rise to the occasion in Emerging markets like Africa, a continent of 1 billion people - 1 billion ways to connect this people. Africa is not left behind in this move towards a cashless ecosystem.

The peoples across Africa are using mobile money and other forms of cashless payment to replace the use of paper money. A cashless ecosystem is the norm in many parts of Africa, especially with the continued introduction of mobile money in the last few years.

Mobile money has given Africa the ability to leapfrog the world and as such lay the groundwork for integrating this alternative form of digital currency with crypto-currencies.

However, cryptocurrency in Africa presents new challenges in this digital currency revolution. Challenges that have led some central banks in the four major countries that Bitcoin and other crypto-currencies have taken flight: like South Africa, Ghana, Nigeria, and Kenya .

In November 2015, the government of South Africa introduced a cyber-laundering bill to efficiently regulate electronic and digital transactions in cyberspace. In December 2015, the Central Bank of Kenya issued a warning against using them, a sort of do it at your own risk.

In January 2017, the government of Nigeria issued a ban on Bitcoin transactions in an attempt to curtail the activities of Bitcoin exchange operators like NairaEx. We see in Zimbabwe, the government is currently working on a regulatory structure on Bitcoin which it plans to introduce soon.

ButMari, an incubated of BitHub Africa is right in the heart of the Zimbabwean economy, which provides a tabula rasa for currency experimentation.

Bitcoin is the largest and most widely-used cryptocurrency on the market, but there are other currencies that are growing, such as Ethereum, Dash, Ripple (which sold out to the banks).

Digital currency is growing at an increasingly brisk pace. Africa seems to be responding to this global trend in digital currency in various ways. In November 2016, and this makes me proud as an African, Senegal took the step to being one of the first countries in the world to announce the introduction of a blockchain-based national digital currency alongside it’s fiat counterpart, the CFA Franc.

This idea of a blockchain-based digital currency is new in Africa and it is being spearheaded by Senegal. I believe very soon it will be necessary for other African governments to follow in kind.

Bitcoin, which is popular in Sub-Saharan and East Africa seems to be filling the need to serve underbanked communities and where the cryptocurrency steps in place of sometimes absent currencies.

We can see a lot of businesses, especially in Nigeria, that use bitcoin to provide services akin to those of banks, such as offering loans.

Companies have emerged that are closing the gap left by money transfer intermediaries and banks, when it comes to cheaper and faster international transfers.

International transfers to Africa are the most expensive in the world, amounting to 4 billion dollars a year. Additionally, online and offline businesses also continue to pay huge prices for transferring money abroad or even domestically, as the majority of banks charge between 10-19% on any transfers to, from and within the African continent.

The biggest factor that will continue to affect the existence of crypto-currencies is regulation, especially compliance. So we ask, what does the growth in the use of digital currency mean for the African compliance sector? Are we ready for the challenges ahead?

Digital currency compliance is still in its infancy, yet, constantly being tasked with global-level demands. The world will not wait for us to sort out our compliance issues before more complex functions are introduced.

Africa should not be playing catch up, but be at the forefront of this KRIIs (Key Research and Industry Initiatives).

Sheeroh Murega Kiarie is a freelancer who blogs at workonlinekenya.com