Africans are turning to cryptocurrency, with transfers to and from the continent increasing 55% over last year
According to a report from Chainalysis, Africa is increasingly turning to cryptocurrency as a means of exchange across fiat types.
Africans are increasingly turning to cryptocurrency as a means of an exchange over local fiat currencies
The number of monthly remittances to and from Africa has exceeded 600,000. Total transfers below $ 10,000 grew 55% in the year to June, reaching $ 316 million. In particular, Nigeria, the continent’s largest economy, South Africa, and Kenya, lead the region in terms of electronic money transfers.
Abolaji Odunjo, who runs a mobile phone retail store in Lagos, Nigeria’s largest city, starts using Bitcoin to pay its Chinese suppliers.
He said he switched to cryptocurrencies because of its speed and convenience:
“Bitcoin helped to protect my business against currency devaluation and enabled me to grow at the same time. Payment method helped him avoid high fees and was an alternative to purchasing increasingly expensive U.S. dollars.”
Many African countries have struggled with devaluation and currency instability. This increases demand and, thus, the cost of purchasing U.S. dollars. Some currencies, like the South African Rand, have lost more than 50% of their value against the U.S. dollar over the past decade.
Data from the company shows that many local individuals and businesses are using cryptocurrencies to avoid high fees, regulatory complexity, and currency volatility. Moreover, paying with Bitcoin also helps people with family members living abroad in countries like the U.S. and U.K. to send money home.
According to a World Bank post, settlement fees in sub-Saharan Africa cost an average of 8.9% – with South Africa recording the highest cost up to 20% per transaction. Bitcoin fees drop significantly, usually below 3%.
The value of cryptocurrencies sent to Africa in 2020 is set to exceed last year’s total deposits of $ 8 billion, with almost $ 1 billion deposited in June alone. The world reports that only $ 48 billion of fiat currency will be sent to sub-Saharan Africa in 2019, with the total amount expected to drop to $ 37 billion this year.
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