Article: Cryptocurrency transactions booming in sub-Saharan Africa
Cryptocurrencies are gaining popularity in sub-Saharan Africa, where transactions reached a record $117.1 billion between July 2022 and June 2023, according to a report published by blockchain analytics firm Chainalysis. Although this represents only 2.3% of total global cryptocurrency transactions, it highlights the rapid growth of cryptocurrency usage in the region.
Nigeria, Africa’s most populous country, has seen massive adoption of cryptocurrencies and climbed from 11th to 2nd place in the Global Cryptocurrency Adoption Index, just behind India. Kenya, Ghana and South Africa are also among the countries ranked highly in this index, reflecting the growing interest in cryptocurrencies in the region.
The report also reveals that the cryptocurrency market in sub-Saharan Africa is largely dominated by retail trading and the use of centralized platforms. More than 50% of the trading volume is carried out through these platforms. Additionally, Bitcoin accounts for a significant share of cryptocurrency transactions in the region, with a rate of 9.3%, surpassing all other regions in the world.
The reasons for this growing adoption of cryptocurrencies in sub-Saharan Africa are multiple. Chainalysis notably highlights that many countries in the region are facing high inflation and growing debt, leading users to turn to cryptocurrencies as a way to preserve their value and achieve greater financial freedom. For example, Ghana experienced inflation of 29.8% in June 2022, following 13 consecutive months of increases.
Although sub-Saharan Africa is the smallest “cryptoeconomy” in the world, cryptocurrencies have become an important part of daily life for many in the region. They offer a way to protect their savings against inflation and find an alternative to the often unstable national currency.
This rapid growth in the use of cryptocurrencies in sub-Saharan Africa opens up new opportunities for fintech investments and partnerships. Governments and businesses must take this development into account and explore ways to leverage this trend to drive economic and financial development in the region.
In conclusion, Sub-Saharan Africa is experiencing a dramatic increase in cryptocurrency transactions, with growing adoption of these financial instruments. This trend shows how cryptocurrencies can play an important role in preserving value and financial freedom in countries facing economic and monetary challenges.. It now remains to be seen how governments and businesses in the region will adapt to this new reality and harness its potential for economic development.