As residents turn to digital currencies to avoid high fees and fiat currency instability in parts of the continent, cryptocurrency remittance is on the rise in Africa
Cryptocurrency microtransactions are up by 55% in African countries over the past year. This comes as Africans look for alternatives to unstable fiat currencies and the high fees they need to pay to make daily transactions.
Data analysis firm, Chainalysis, published a blog that focused on cryptocurrency remittance and fiat currency devaluation in Africa. According to the firm, Africans are increasingly turning to digital currencies for their everyday transactions over their local fiat currencies. The data published by the company shows that more local individuals and businesses in the region are sending and receiving funds via cryptocurrencies to avoid high fees, regulatory complications and fiat currency instability.
At the moment, Africa has the smallest crypto economy in the world, with just $8 billion worth of cryptocurrency transacted in the region over the past year. However, despite the relatively small crypto economy, Africans are starting to use cryptocurrencies more as they battle economic instability, high fees and finding new ways to save.
The continent saw a 55% jump in the total number of transfers under $10,000 in a year back in June. The 55% increase saw total micro-transactions reach $316 million. Nigeria — the continent’s largest economy — leads the way in terms of microtransactions, followed closely by South Africa and Kenya.
Adoption of crypto services on the rise in Africa
Ray Youssef, CEO and founder of peer-to-peer (P2P) cryptocurrency exchange Paxful, told Chainalysis that Africans are starting to integrate cryptocurrency services into their businesses.
He stated that “Some of our users in Africa are even building their own remittance businesses on top of Paxful. One man I spoke to who lives in South Africa but is originally from Nigeria saw how hard it was to send money back home, and started a business where he would take cash from other Nigerian expats, convert it into Bitcoin, send it to someone in Nigeria via Paxful, and have that person convert it into naira and deliver it to the person’s family”.
There are similar stories like this in various parts of Africa, and it is starting to become a norm in the continent.
Abolaji Odunjo, a Lagos-based mobile phone retailer, told Reuters he is now using Bitcoin to pay his Chinese suppliers. He told the publication that Bitcoin has helped to protect his business from the central bank’s currency devaluation, and he uses it for speed and convenience. Hence, he has been able to grow his business, thanks to the features of Bitcoin.