Africa is a relatively untapped gold mine as there are tons of opportunities yet to be fully explored. Smart investors can see this and are continually investing large sums of money in the mainland. The infusion of cryptocurrency into the African banking sector is an opportunity that has yet to be fully explored. Although the crypto movement is relatively new compared to other financial markets such as forex and stocks, it has had a notable impact on banking and financial markets globally and in Africa inclusive. Banking in Africa 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, cryptocurrencies are currently opening up new ways for small and medium-sized businesses to gain easy access to funds from investors. Furthermore, we believe that cryptocurrency is not just a temporary wave that will soon pass, but a permanent solution to the enduring challenges posed by traditional banking systems. Cryptocurrency users in Africa are likely to continue to increase as digital payments are gradually preferred over cash payments as it saves time and is very easy even from a mobile phone.
The current role of cryptocurrencies in African banking
Early adopters in Africa have decided not to be left out of the crypto movement, which is the latest innovation in the world of money. According to one policy brief by a United Nations agency known as UNCTAD, cryptocurrencies are becoming more and more popular in African countries. A notable percentage of some African countries are currently using digital currencies as a means of depositing their money. According to the policy brief, the percentage of cryptocurrency users as of 2022 in Kenya is 8.5%, in South Africa 7.1% and in Nigeria 6.3%. Another African country known as the Central African Republic has taken a bold step and has adopted bitcoin as legal tender, after this announcement all south african forex brokers increased the purchase price of Bitcoin following the market trend.
Crypto in Africa has real use cases as digital currencies currently address a number of economic challenges in the African region, especially sub-Saharan Africa. A notable use case for cryptocurrencies in Africa is the reduction of financial challenges for the micro, small and medium-sized business sectors to facilitate the evaluation of investment funds. According to Chainalysis, $562 million in remitted investments in sub-Saharan Africa were made through popular cryptocurrencies like Ripple. With financing being a major challenge in the African housing and corporate sector, easier access to investor funds through crypto crowdfunding is definitely a much-needed innovation.
In addition to businesses using cryptocurrency to raise investment funds, individuals also use cryptocurrency to facilitate personal banking transactions. Among the crypto-savvy population in Africa, it is not uncommon to see people using crypto to accept payments, especially from international clients or employers. Due to rising inflation, some cryptocurrency users even store their wealth in stablecoins like USDT to preserve the value of their money instead of leaving it in their local currency. Also, some experienced and savvy investors in South Africa (and other African countries) are involved in crypto trading, and the best crypto trading platform in south africa it’s probably Exness.
How Crypto Will Change Banking In Africa In The Future
Banking in Africa is still heavily dependent on cash, but digital payments are slowly taking over banking in the region, especially in 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 included. Corruption within some African governments has resulted in a lack of trust in the government by its citizens. Perhaps, this is the reason why the launch of Nigeria’s national digital currency called e-naira was not well received by its citizens.
Mobile payment is now a crucial part of Africa’s traditional digital banking. This is due to the convenience and easy accessibility even in remote towns 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. Therefore, in the future, cryptocurrencies will most likely be the platform of choice for many peer-to-peer transactions among Africans. As more people in Africa continue to embrace cryptocurrencies, the government’s power to create arbitrary laws in the banking sector will slowly be removed. It can be very annoying to have unnecessary penalties and restrictions on your bank account just because the government feels they can do whatever they want.
In addition, cryptocurrencies are a solution to the financial insecurity that is currently experienced in the banking sector in Africa. The intense security of the blockchain makes it nearly impossible for hackers to gain access to people’s funds without the wallet’s seed phrase. Security, transparency and easy access to cryptocurrencies will likely be the main influencers of African banking in the coming years.
In the reverse
The future of cryptocurrency in the banking sector in Africa is full of opportunities, but there is a possibility that the growth of cryptocurrency in banking in the region will be a road fraught with difficulties. Cryptocurrencies threaten the sovereignty that some African governments currently enjoy, as they have no access to control and place unnecessary restrictions on citizens’ cryptocurrency earnings. Therefore, the fight against cryptocurrency adoption could be so fierce and even enough to stall cryptocurrency growth in some African countries.
It is clear that cryptocurrencies will continue to shape the future of banking in Africa. The question is, what future will crypto really create in Africa’s banking sector? It is a valid concern that cryptocurrencies could end up being the safe haven to hide illegal funds, as it is possible to create a crypto wallet of which no one knows the actual owner.
Why should you care?
As a cryptocurrency enthusiast, you may or may not reside in Africa. This doesn’t matter as cryptocurrencies are a global game changer in the world of money and even if you don’t live in Africa, you may want to invest in businesses that promote cryptocurrency adoption in Africa. A business idea as simple as educating Africans on how to buy cryptocurrency could become a great investment if managed properly with the right business skills.
If you are not interested in building a business around cryptocurrencies in Africa, simply investing in popular cryptocurrencies and holding them for the long term could be a smart investment decision. Of course, you probably shouldn’t put all of your life savings into investing or trading cryptocurrency. Remember that cryptocurrency is here to stay, don’t be left out.