Sub-Saharan Africa, traditionally a small player in the global cryptocurrency market, is witnessing a slow but steady surge in crypto adoption. Recent findings from the Chainanalysis report reveal that the region accounted for only 2.3% of the global transaction volume between July 2022 and June 2023. Despite the seemingly low figures, the report revealed that cryptocurrencies have firmly embedded themselves in key markets, becoming an integral part of daily life for many residents.
As a part of the region’s journey to widespread adoption, we recently saw Visa, the world’s largest card network announce a strategic partnership with VALR; the largest South African crypto exchange by trading volume that has now enabled the exchange to issue payment cards and deliver digital payment solutions to their customers across the region and beyond.
To delve deeper into the dynamics of crypto adoption in Southern Africa, Chris Maurice, the CEO of Yellow Card, engaged in insightful interviews on CNBC Africa and Business Day TV. The discussions touched upon the reasons behind the region’s adoption, the impact of regulations, and the promising future that lies ahead.
Chris expressed optimism about the continent’s crypto landscape, highlighting that despite its relatively modest share in the global market, Southern African countries such as Botswana, South Africa, and Namibia have taken proactive steps by announcing licensing regimes for cryptocurrencies. This signals a commitment to fostering a conducive environment for crypto businesses to thrive.
In his words, “We’ve seen a great sea change of regulation over the past 12 months. And so now you have countries like South Africa where there is a licensing regime for crypto, you have Botswana which had the first ever licensing regime for crypto, you have Nigeria which has announced one, the CEMAC region which has announced one, Namibia, and a number of other countries. On top of that, they are exploring CBDCs, they’re exploring Central Bank Digital currencies, and actually issuing their own digital currencies like in Ghana, Kenya, etc. The landscape across the African continent for crypto has really evolved in a really positive way, and the regulation has encouraged the industry to continue to grow”.
One key distinction as noted by Chris is the difference in the use cases of crypto between Africa and the Western world. In the US, cryptocurrencies are often purchased as speculative assets with the anticipation of future growth. In contrast, in Southern Africa, crypto serves as a practical alternative to traditional banking, facilitating cheaper cross-border payments, remittances, and investments as a hedge against inflation and the devaluation of local currencies, like the recent devaluation of the Malawi Kwacha by 44% against the dollar.
The trend is becoming increasingly evident as fintech companies across the region leverage stablecoins for international payments. Maurice predicts that this positive evolution will continue over the next 5 to 10 years, reshaping the entire landscape of the banking system and even prompting governments across Africa to embrace cryptocurrencies as a legitimate means of payment.
As Southern Africa takes a pioneering stance in developing regulatory frameworks and fostering crypto-friendly environments, the continent seems poised for a transformative journey toward widespread cryptocurrency adoption. The intersection of technological innovation, regulatory support, and a unique set of use cases positions Southern Africa as an emerging hub for cryptocurrency enthusiasts and businesses alike.