Study: Cryptocurrency adoption figures in Africa keep growing

The increasing interest in crypto APIs, crypto-fiat payment systems, stablecoin payments, and other web3-related financial services reflects a global trend. PHOTO | COURTESY

The adoption of cryptocurrencies in Africa is an exciting topic that has gained attention over the past decade. Many Africans are already accustomed to using mobile money, suggesting they may be well-positioned to embrace cryptocurrencies.

According to a study by ConsenSys and YouGov, Nigeria and South Africa are among the top five countries globally where people have a strong understanding of digital currencies.

These two countries have a combined population of nearly 272 million, and Nigeria's population is projected to grow to over 377 million by 2050, a substantial increase from 213 million in 2021. This suggests a growing interest and potential for cryptocurrency adoption in the region.

While Nigeria and South Africa often dominate cryptocurrency discussions in Africa, the entire continent presents a promising landscape for digital currencies.

Growing interest

The increasing interest in crypto APIs, crypto-fiat payment systems, stablecoin payments, and other web3-related financial services reflects a global trend. However, in Africa, these innovations are not overshadowing the broader fintech landscape but rather complementing it.

While there is a growing awareness and exploration of web3 and cryptocurrencies, they currently play a relatively minor role in the operations of companies at a substantial scale in Africa. The fintech landscape in the region remains diverse, with a few entities actively involved in crypto trading and usage, suggesting a cautious integration of these technologies into the existing financial ecosystem.

Mobile money is a testament to how Africa swiftly embraced innovative payment technologies, potentially paving the way for cryptocurrency's substantial role in the region.

However, it's vital for entrepreneurs not in Africa during the emergence of mobile money to recognize that its triumph is attributed to more than just the technology itself. The fact that Africans use smartphones beyond just playing the Aviator game sure helps, but a significant portion of its success can be attributed to the established regulatory framework to support and facilitate its growth.

Regulatory support played a crucial role in M-Pesa's success in Kenya, as highlighted in a 2013 GSMA case study. In African fintech, adherence to regulations provides a conducive environment for technology to thrive. Fintech companies can operate within these bounds by collaborating with licensed entities, obtaining permits, or participating in government initiatives like regulatory sandboxes.

This diversity of options showcases how fintech companies can legally conduct business and prosper within the regulatory framework.

A shift in fintech

The fintech sector in Africa has been a starting ground for innovative ideas, largely thanks to the pioneers of mobile money. Nevertheless, not all regional fintech companies embrace cryptocurrencies at the same pace.

Recent data indicates that Africans are increasingly shifting away from traditional financial services, particularly in the wake of the COVID-19 pandemic. This shift towards fintech is not only making financial services more accessible but also more efficient in many cases, contributing to creating an economic system that's competitive on a global scale.

There are numerous relevant statistics to draw from, with recent data from Disrupt Africa indicating that African fintech startups have successfully raised over $2.7 billion in funding over the past two years.

According to a report by Finextra and McKinsey, the African fintech sector is poised to generate a substantial $230 billion in revenues by 2025. Despite these promising figures, it's essential to recognize that crypto adoption and utilization still have room for growth within the region.

While the crypto sector may currently have smaller user numbers compared to traditional fintech, it has nonetheless demonstrated noteworthy success stories across the continent. For instance, in recent news reported by Afridigest, Nestcoin introduced a virtual card product, and Luno enabled people to make grocery purchases using cryptocurrency.

The coexistence of a booming fintech sector and the potential for crypto expansion highlights the dynamic and evolving nature of the financial landscape in Africa, with both traditional and emerging technologies playing significant roles in shaping its future.

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