Retail is increasing crypto use in sub-Saharan Africa
A recent analysis of global cryptocurrency transactions by Chainalysis sheds light on the unique nature of sub-Saharan Africa’s crypto market, which represented just 2% of global activity between July 2021 and June 2022.
For example, although large transactions driven by investors and financial institutions helped Western Europe and North America account for around 20% each of total transaction value during that period, sub-Saharan Africa shows significant adoption in terms of retail transactions.
In fact, by value, retail transfers under $10,000 account for 6.4% of the region’s transaction volume, more than any other region globally.
The role of retail is even more evident when looking at the number of individual transfers, which accounted for 95% of all transfers in sub-Saharan Africa. And of these, transactions worth less than $1,000 accounted for 80% of all crypto activity in the region, measured by the number of transactions.
As a result of the penetration of cryptocurrency into daily commercial transactions, three African countries make the top 30 in Chainalysis’ Global Crypto Adoption Index: Nigeria, Kenya and South Africa, which were ranked 11th, 9th and 30th respectively.
In a recent interview with PYMNTS, Owen Odia, Nigeria country manager of global cryptocurrency business Luno, said Nigerians’ appetite for crypto was driven by three factors; an interest in currencies such as bitcoin as a speculative investment, the ability to use crypto to hedge against inflation, and use it to make international payments to merchants who do not accept the local naira currency.
Watch Odia’s interview: Consumers in emerging markets are lukewarm about the value of CBDCs
Nigeria’s crypto-powered retail sector is also benefiting from incoming transactions, thanks to FinTechs such as Lazerpay, a Nigerian crypto payment gateway startup that helps businesses accept crypto payments from anywhere in the world.
With Lazerpay, African sellers can sell to international customers without those customers having to trade in local currency or incur foreign exchange fees. Users can then cash out in stablecoins or one of several fiat currencies, including the naira or Ghana’s cedi.
Other African companies making moves in the space include Johannesburg-based firm VALR, Kenyan FinTech Bitpesa and Yellow Card, a pan-African cryptocurrency exchange that this month closed a $40 million Series B funding round to fuel its expansion across the continent.
See interview with VALR CEO: Crypto Seen as Africa’s Cross-Border Payments ‘Game Changer’
Also related: Crypto Exchange Yellow Card Raises $40M to Expand
In keeping with Africa’s preference for mobile money, the Yellow Card even allows users to fund their accounts via USSD transfer, laying the groundwork for further integration of the continent’s mobile money and crypto payment networks.
For James Mwangi, CEO of Kenya’s largest lender, Equity Group Holdings, digital currencies could even improve the mobile money system, if regulators get on board.
“Africa will benefit significantly from leapfrogging the fourth industrial technology, and cryptocurrency is one of them. Cryptocurrency might as well complement the mobile money wallet, but essentially we need to talk to the regulators,” he told a conference audience recently, according to PYMNTS.
Read more: Kenyan CFO: Crypto can improve mobile money
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