As Bitcoin continues to pave the way for the crypto space, several continents see huge increases in local awareness. Nowadays, Africa is one of the most vibrant continents in terms of Bitcoin remittances.
Experts analyzed the Bitcoin environment in one of the oldest continents in the world, Africa, and observed close similarities with El Salvador. In this article, you’ll discover why Bitcoin is having so much traction in Africa.
Bitcoin’s Remittance is Revolutionizing Africa
Last year, the Central American country moved to recognize Bitcoin as a legal tender. However, Africa seems to hold certain factors that account for Bitcoin’s growth. For example, most Africans are unbanked but possess cell phones. In addition, Africa boasts a huge diaspora that frequently sends money to their relatives on the continent.
Therefore, nowadays there are numerous chances for mainstream Bitcoin adoption across the African continent. Money transfers between the highly mobile population in Africa are a good sponsor of the growing Bitcoin surge. In addition, reports state that there are over 30 million Africans in the diaspora. These groups of Africans living outside their fatherland contribute to the widespread attention Bitcoin receives in that part of the world.
Did you know that key African countries like Nigeria have previously moved toward Bitcoin regulation? However, the mass population remains unbanked. As a result, Bitcoin remittance offers a bailout to a huge percentage of their population.
Difficult to track in data #bitcoin's impact on remittance markets. Here's one rough compare:
Nigeria's direct remittances fell -78% the first 6 months of 2020.
At the same time, estimates for Africa bitcoin transfers under $10k rose 104%.
Sources below. pic.twitter.com/WpNxmkawPg
— Sam Rule (@samjrule) August 10, 2021
The Mobile Culture in Africa
Apart from boasting a huge mobile population, Africa is fully a part of the “mobile money” conversation. Most Africans already make mobile transfers from their cellphones; it’s a part of the modern tech culture on the continent. As a result, the African continent has a high rate of mobile transfers. According to reports, mobile transfers in sub-Saharan Africa are one of the biggest in the world.
Africa’s mobile transfers might witness an exponential explosion by 2025. Experts predict that over 600 million Africans will own mobile wallets by then. This mobile culture in Africa would undoubtedly build a framework for broader Bitcoin adoption in Africa in the coming years.
Now that you know how Africans are taking advantage of their cellphones to make bitcoin’s remittances. Let’s take a look at the three reasons why this happened:
1) Accidental Government Backup to Bitcoin
Most countries in Africa face stiff opposition from their leadership regarding Bitcoin adoption. These leaders set up strict policies that would otherwise curb the growth of Bitcoin in their respective nations. However, rather than stalling the growth of Bitcoin, these policies have acted as a launchpad for Bitcoin. As a result, more people have turned toward Bitcoin. These governments have provided accidental support.
In Africa, bitcoin – the original and biggest cryptocurrency – is finding the practical use that it has largely failed to elsewhere https://t.co/EywE8Jqjll by @alexisak @tomwilson1983 pic.twitter.com/9U2Eeh1Sfl
— Reuters Business (@ReutersBiz) September 8, 2020
The Central Bank of Nigeria, for example, halted international mobile money transfers to Nigeria in 2020. The CBN made the move after it approved US currency payouts for international remittances. As a result, only Nigerians with bank accounts could receive funds from overseas. In addition, cash payment is not available with all international money transfer services to Nigeria.
Furthermore, most Zimbabwe natives use Bitcoin due to the country’s strict policies. Zimbabwe outlawed foreign currencies and restricted mobile transfers. Several citizens of the country now use Bitcoin to bypass these restrictive policies. These government policies point their citizens to Bitcoin as a better payment alternative.
2) Currency Strength
Some African countries suffer double digit-inflation. These include Zambia, Zimbabwe, Nigeria, Sudan, South Sudan, Ethiopia, Liberia, and Sierra Leone. Some of these currencies pale in comparison to the dollar. For example, the Nigerian Central Bank depreciated the naira three times in 2019.
The federal bank depreciated the naira by 7.6% in May 2021. Most Africans adopt Bitcoin remittance in search of a greater gain. Some workers prefer to receive their payment in Bitcoin, which isn’t pegged to their local currency. This factor will act as a launchpad for a wider Bitcoin embrace.
— Oxford Economics Africa (@OEAfrica) February 11, 2022
3) The High Cost of Transfers
Africans outside their country love to transfer funds. However, the high cost of these transfers is both limiting and alarming. According to reports, the cost of sending $200 to Sub-Saharan Africa toward the end of 2020 was 8.2% on average. Surprisingly, the cost of transferring money within Africa is more expensive. To remedy this, people now opt for Bitcoin remittances to reduce the high cost of transfers.
The African continent is home to over a thousand languages. However, most of these cultures are not English-speaking. Fortunately, several institutions provide education to Africans to bridge the gap. This education would translate Bitcoin materials to local African languages. This would remove the limitation caused by the language barrier.
Finally, both positive and negative factors align to ensure wider Bitcoin adoption in Africa. Therefore, one can only expect a crypto boom on the continent in the years to come.
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