Papa-Wassa Chiefy Nduom on December 2017 wrote on why African central banks need to invest in bitcoin mainly to mitigate the weakening dollar and protect their reserves. Also, he outlined how the cryptocurrency can be used to handle the issue of infrastructure that has plagued the continent for years. BTCManager approached him to find more details.

Papa-Wassa Chiefy Nduom is vice president, director, and lawyer of Groupe Nduom which is a family business group. Groupe Nduom consists of many social enterprises and businesses that focus on development opportunities within West African countries with the objective of influencing the African Diaspora in the future. Bitcoin is said to have captured his imagination, as a pathway to propel developing countries.

Dedollarization Using Bitcoin

For years, African countries have accumulated a vast amount of US dollars to control their inflation, exchange rate successfully, and minimize adjustment expenses that accompany fluctuations in world expenditure. African countries maintain reserves usually from humanitarian aid and higher commodity exports. Besides, when holding global reserves not only permits countries to buy goods but is also a major tool used to sustain global competitiveness by maintaining favorable exchange rates.

The holdings of dollar reserves are key to African countries; hence the dollar value has an impact on the performance of their economies. Most analysts predict the probability drop of the dollar in the next one year against Euro and other key currencies. Another forecast predicts the drop of the dollar to reach ten percent.

Nduom recommends that due to the projected value loss of the dollar, it is reasonable to risk the 10% of the central bank reserves on emerging assets such as bitcoin because there are high gains to achieve. According to Nduom, African central banks have what it takes to lose if the opportunity will be used in rebalancing their reserves – as ultimately, the results might lead to the lengthening suffering and human poverty on the continent.

A Boon for Economic Development?

Nodes of bitcoins have reached far and wide covering the entire continents of the world. However, according to Nduom, African countries and their Diasporas appear to be hanging behind in matters of emerging developments, resulting from the legacy of the slave trade and economic migration.

Nduom is not happy with the situation at all and elaborates how Groupe Nduom (his family business group) invests in companies that consider financial, environmental and social aspects in an attempt to correct the shortcomings and leave their mark. Their effect is only restricted by the lack of capability to produce income and invest in “frontier markets” to make actual progression.

According to Nduom, if the central banks of Africa fail to spot this chance, they will be underrepresented in the bitcoin space. “Politically, I feel if the economic scales aren't balanced when the sun rises, the people with high melanin in their skin will be highly underrepresented on the spaceship. Our present implementation of the world order plainly does not prioritize on optimizing this potential. You may argue that our structures are not built in direct opposition to this concept.” Said Nduom.

During Ghana’s independence, the president of that time suggested a ‘United States of Africa,’ which would be capable of prioritizing aid poverty alleviation and economic integration. Regrettably, African countries have tighter trade linkages with developed countries as compared with those nearby. The deficiency of infrastructure is likewise holding the continent back, with more than 50% of roads unpaved, limited maintenance of the only railways and poor linkages of ports to railways and roads.

Nduom expresses his notion that bitcoin adoption would lead to conformity across the African continent and motivate ways to work in the direction of a development fund to enhance the current infrastructure. Probably, it’s the grassroots movement that is held as the practical solution to economic development according to some professionals – the polar reverse of the top-down method pursued by the World Bank, the IMF and others.