New report from Chainalysis suggests sub-Saharan Africa is rapidly adopting cryptocurrencies and emerging as a leader in digital asset innovation
Sub-Saharan Africa is rapidly adopting cryptocurrencies, transforming the financial landscape and emerging as a leader in digital asset innovation. According to the latest Chainalysis report, between July 2023 and June 2024, the region accounted for just 2.7% of global cryptocurrency transactions, but with an astounding on-chain value of $125 billion. was recorded.
Source: Chainalysis
Leading the way is Nigeria, the continent’s most populous country and ranked second in the world on Chaineries’ Global Adoption Index. This position highlights Nigeria’s important role in the advancement of blockchain technology across the region. Additionally, Ethiopia (26th), Kenya (28th) and South Africa (30th) are all in the global top 30, indicating broad regional participation.
Stablecoins will stabilize African economies
Stablecoins have become an integral part of sub-Saharan Africa’s crypto landscape, accounting for around 43% of the region’s total trading volume. These digital currencies are linked to stable assets such as the US dollar, providing a reliable store of value and enabling international payments. This is especially important in regions where local currencies are unstable and access to foreign currency is limited.
Source: Chainalysis
Rob Downs, head of digital assets at ABSA Bank CIB, said there was growing interest in stablecoins among South African financial institutions. “Our institutional investors are particularly interested in using stablecoins as a tool to manage liquidity and reduce exposure to currency fluctuations,” Downs explained.
Additionally, Chris Maurice, co-founder and CEO of Yellowcard, Africa’s leading crypto exchange, explains the practicalities of stablecoins in addressing the region’s foreign exchange issues. emphasized the advantages.
“About 70% of African countries are facing currency shortages, and businesses are struggling to access the dollars they need to operate,” Morris said. In countries like Nigeria, where the value of the local currency has fallen significantly, stablecoins provide an important alternative.
DeFi adoption surges across the continent
Sub-Saharan Africa is at the forefront of decentralized finance (DeFi) adoption due to the urgent need for accessible financial services in areas where traditional banking is limited. According to a World Bank report, only 49% of adults in sub-Saharan Africa had a bank account in 2021, highlighting the huge opportunity for crypto-based solutions.
Nigeria stands out as a central player in this movement, attracting over $30 billion in DeFi investment last year. African cryptocurrencies serve more than just speculative purposes. Africans are increasingly using cryptocurrencies for commercial transactions to protect themselves from inflation and to make frequent small retail transfers.
Source: Chainalysis
Moyo Sodipo, COO and co-founder of Busha, a Nigerian cryptocurrency exchange, highlighted the tangible benefits of adopting cryptocurrencies. “People are starting to understand the real-world utility of cryptocurrencies, especially in day-to-day transactions. This is a shift from the previous view of cryptocurrencies as just a get-rich-quick scheme,” Sodipo said. he said.
He further added that activities such as bill payments, mobile credit replenishment, and retail purchases are now routinely processed through cryptocurrency platforms.
A notable impact of cryptocurrencies in sub-Saharan Africa is on remittances. Traditional money transfer methods are often expensive and inefficient, but crypto-based alternatives are changing this. Data shows that sending $200 from sub-Saharan Africa costs around 60% less using stablecoins than sending traditional fiat currencies.
Regulators fuel Africa’s crypto boom
As cryptocurrency adoption continues to surge across sub-Saharan Africa, regulators are grappling with a rapidly evolving landscape. In South Africa, the Financial Sector Conduct Authority (FSCA) classifies cryptoassets as financial products, providing some regulatory clarity. However, specific regulations for stablecoins are still being developed.
Rob Downs of ABSA Bank said: “We are working closely with regulators such as the Reserve Bank (South Africa) to ensure we are prepared for any developments around stablecoin regulation, which will soon become a key focus. It is expected that this will happen.”
Chris Maurice of Yellow Card sees stablecoins playing a central role in opening up African economies to global markets. “Stablecoins are actually opening up a market for African currencies that have not previously had an international presence,” he noted.
This increased economic opening has the potential to increase price transparency, encourage foreign investment, and ultimately contribute to regional economic growth and development.