What Factors Are Driving The Bitcoin Remittance Revolution In Africa? These Ones
The Bitcoin remittance business is blowing up all over the world. South African financial website moneyweb brings us the report directly from the oldest continent. The conditions that led to El Salvador making Bitcoin legal tender are present all over Africa. The people are unbanked but everybody has mobile phones. Plus, the diaspora is huge and sends money home constantly while big companies rob them blind with high fees.
Related Reading | Is Largely Unbanked Africa Primed for Bitcoin Adoption?
“The African continent has many opportunities for widespread Bitcoin adoption. One of those opportunities is remittance fueled by Africa’s growing ~mobile~ population. There are over 30 million Africans living outside their countries of origin. Since 2012, the African Union considers the African diaspora the sixth Africa’s region.”
On one hand, countries like South Africa, Nigeria, and Kenya want to regulate bitcoin and other cryptocurrencies. On the other hand, according to the World Bank Global Findex, 60% of the population on the continent is unbanked. The recipe is there. And Bitcoin remittances could be the use case to bring mass adoption to Africa.
Remittance Revolution, Factor 1. Mobile Wallets
Not only is the mobile population growing, but the entire continent also has extensive experience with other forms of “mobile money.” It is a concept already rooted in the culture:
“Africa is the global leader in the use of mobile money. Sub-Saharan Africa has the world’s fastest-growing mobile money sector. The region will continue to see substantial growth in the number of people owning cell phones.”
It is predicted that mobile subscribers in sub-Saharan Africa will reach 623 million by 2025, half of the continent’s population. The figure will be even higher due to the culture of sharing mobile phones. From there to using Bitcoin, the most efficient monetary network in the world, is a simple step. The road is clear.
Factor 2. Government Policies
Unintentionally, governments across the African continent are pushing for the adoption of Bitcoin with their restrictive policies. For example
“In 2020, the Central Bank of Nigeria suspended international mobile money transfers to Nigeria. The suspension came after the banking regulatory authority allowed payments in US dollars for international remittances into the country.”
This means that only Nigerians with bank accounts can receive money from abroad. Not all international money transfer services in Nigeria support cash payments. Everyone underestimates the adoption rate of #Bitcoin in Nigeria, soon it will become a major religion.
The government also imposed restrictions on mobile money services as well as daily withdrawal limits due to a severe shortage of fiat currency. To circumvent these restrictive policies by the central bank, an increasing number of Zimbabwean citizens prefer Bitcoin remittances to fiat money.
Another example:
“In Zimbabwe, several restrictive monetary policies have led to the growing interest and use of Bitcoin for remittances. Firstly, the government banned all foreign currencies such as the US dollar, euro, South African rand, and others.”
Remittance Revolution, Factor 3. Weak Currency
This factor was not present in El Salvador, which is a dollarized country. However, in Africa, there are several “countries experiencing double-digit inflation such as Zambia, Zimbabwe, Nigeria, Sudan, South Sudan, Ethiopia, Liberia, and Sierra Leone.” For example:
“The Guinean franc is one of the weakest currencies in the world since its launch in 2022. In 2020/21, the Zambian kwacha and the Zimbabwean dollar were among the worst-performing currencies in the world. The Nigerian naira has lost over 50% of its value since 2015. The Central Bank of Nigeria has devalued the naira three times in 2019. In May 2021, the central bank devalued the naira by 7.6%”
What did the Nigerians do? They embraced Bitcoin remittances. What will other countries do? They will also adopt Bitcoin remittances!
Who said Kenyans don’t own #Bitcoin..
Kenya Ranks 2nd in Africa in P2P settlement, overtaking South Africa 🌍.#cryptocurrencyKE 🇰🇪#africarising 🖤 pic.twitter.com/fg8Ivj3mQA
— CRYPTOCURRENCY KENYA 🇰🇪 (@CryptoHubKE) February 8, 2022
Factor 4. Transfer Fees And Speed
The remittance fees were a prominent factor in the El Salvador story. And in Africa, the story repeats itself:
“Remittance fees have been a major issue in El Salvador’s history, and this problem repeats itself in Africa. According to a World Bank study, transfer fees to sub-Saharan Africa, the world’s poorest region, are the highest in the world. In late 2020, the cost of sending $200 to sub-Saharan Africa averaged 8.2%, making it even more expensive to send money to Africa.”
In response, people in sub-Saharan Africa can wait for the ANC to deliver on its promises to redress historic injustices in South Africa, or they can take control of their lives and buy Bitcoin now.
I could wait another 25 years for the ANC to do good on their promises to fix some of historical injustice in South Africa, or I can take control of my own life and buy #bitcoin now.
— Tensai Bankai⚡️ (@tensaibankai) February 8, 2022
Remittance Revolution, Factor 5. Education
This is a positive one, for a change. According to BTrust’s Abubakar Nur Khalil, in a recent article for Bitcoin Magazine:
“Education is also crucial for Bitcoin adoption in Africa. Most of the available Bitcoin material is in English, which means that translation efforts are needed to unlock knowledge for millions of non-English speakers on the continent.
Currently, there are efforts around Africa to translate Bitcoin material into different languages such as Amharic, Arabic and Wolof by Kal Kassa, Arabic_HODL and Fodé Diop, respectively, with ongoing work on others.”
Related Reading | South African Man Loses $900,000 Worth Of Bitcoin After Accidentally Deleting Keys
There are organizations, such as Exonumia and BTrust, which are creating open source African language translations for Bitcoin literature through the community. BTrust, funded by Jay-Z and Jack Dorsey, is on a mission to promote the development of Bitcoin in Africa and India
Meet one of the board members of Jay-Z’s and Jack Dorsey’s blind Bitcoin trust: Recursive Capital CEO Abubakar Nur Khalil in Nigeria. He tells @sonalibasak how he envisions web3 in Africa https://t.co/IdyBB7wTvb pic.twitter.com/eFKEga4Nbg
— Bloomberg Technology (@technology) February 4, 2022
Conclusions And The Market
Overall, Bitcoin adoption in Africa could form a perfect storm due to the negative factors, such as high fees and weak currencies, and positive factors, such as high adoption of mobile devices and available education. The Bitcoin remittance revolution is leading the way.
BTC price chart for 02/10/2022 on Bitstamp| Source: BTC/USD on TradingView.com
After a recent surge of sorts, Bitcoin has been trading horizontally for the last few days.
Featured Image by James Wiseman on Unsplash | Charts by TradingView
