As traditional banking remains out of reach for many still unbanked and underserved In Africa, is Cryptocurrency slowly beginning to take a share of African wallets.
The continent is anticipated to reach $2.9 billion in cryptocurrency revenue this year, and this growth is only going to grow exponentially as crypto becomes increasingly relevant to a digital-savvy population that’s distrustful of traditional banking services. In 2022, the World Bank reported that well over 50% of adults in 16 economies across 36 surveyed have a bank account. While account ownership has increased, the continent remains a financial playground where innovative solutions and transformative approaches to money management flourish.
Mobile money, says the World Bank, has redefined financial inclusion in countries like Kenya – M-PESA, for example, is the continent’s biggest success story and the lingo around its transactions has crept into local dialect.
And cryptocurrency, says the 2024 Geography of Crypto Report by Chainalysis, has equally found its footing in developing economies where millions opt into alternative banking and financial management solutions. The report found that sub-Saharan Africa is currently in the lead for decentralized finance (DeFi) adoption because people are craving accessible financial solutions and while the region only accounts for 2.7% of global cryptocurrency transaction volumes, Nigeria comes second in global cryptocurrency adoption while Ethiopia, Kenya and South Africa made the top 30. Middle East and North Africa (MENA) account for 7.5% of global transaction volumes and was the seventh largest crypto market in 2024.
In these markets where crypto opens up doors often held shut by traditional banking systems, these digital assets have evolved to become essential to economic survival. No longer just for use by wealthy investors exploring crypto’s potential on a digital playground, these currencies are being adopted by digital-savvy users from informal sectors who want to bank, invest and spend within a trusted and accessible ecosystem.
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As Frank Leonette, Founder and CEO of AFRIDAX, tells FORBES AFRICA: “It’s not the white-collar individuals who are driving crypto, it’s people from informal sectors. They’re using their mobile devices to transact in crypto because the beauty of this technology is that it is peer-to-peer. It doesn’t need a bank or intermediaries. If I send you 10 bitcoins, you will receive them immediately on your device and it removes the barrier-to-entry significantly.”
Instead of proof of address – a challenge in most rural areas – and identification and other complex paperwork hurdles, crypto users can move into the market easily.
Leonette highlights how Zimbabwe was a superb example of how bitcoin transcended the challenges of local currency because it was so easily transactable in the country.
“Cryptocurrency also makes it easier to do cross-border transactions and send money home – users don’t have to pay the astronomical fees associated with legacy systems nor do they have to wait three to four days for money to clear. It’s an instantaneous transaction.”
Financial institutions are paying attention to this shift.
In South Africa, Auguste Claude-Nguetsop, Partner and Southern Africa Head of Financial Services at KPMG, tells FORBES AFRICA that digital banks like Bank Zero and TymeBank have evolved to meet the needs of the unbanked population, structuring their costs and services to deliver what these users need. However, he believes that while cryptocurrencies do lower the barrier to entry with regards to access, cost and borders, they aren’t that easy to use or understand.
“We have a growing digital banking sector which is now also experimenting with crypto, especially as it’s attractive to those looking for cross-border payments,” he explains. “However, the complexity of crypto makes it a barrier for a large part of that market.”
He’s right. Cryptocurrencies aren’t simple – there are multiple types, different levels of performance, an abundance of crypto exchanges and the increasing risks around fraud and cybersecurity.
Thomas Lobban, Tax Legal Specialist at Latita Africa, tells FORBES AFRICA that while the walls have come down regarding crypto and it has become increasingly easy to use and access, there are dangers, and it isn’t quite as useful as perhaps pundits would have you believe.
“People aren’t abandoning their bank accounts in favor of crypto because what you can purchase is still limited, even in areas that have a primarily informal economy they prefer cash, which has a tangible value to it in their hands, as opposed to crypto which is still volatile,” he says. “Where you’ve really seen an explosion of crypto is in places that have hyper-inflationary currencies. If your local currency isn’t going to hold its value between today or tomorrow, crypto becomes an incredibly attractive prospect.”
This is exactly one of the reasons why crypto has found its feet in countries like Zimbabwe and Turkey. According to Kaiko Research, Turkey’s inflation and currency devaluation alongside bitcoins growing value has led to the country’s rapid adoption of cryptocurrencies to offset this financial instability. These digital assets are being further enhanced by the fact that in 2024 there was a swathe of regulatory changes that have shifted the narrative around crypto. Standardized regulations and licensing are building more secure and trusted digital financial environments – South Africa was the first African nation to introduce licensing for crypto exchanges which, the Crypto Council for Innovation calls a “significant leap forward”.
Perhaps crypto’s expansion in Africa is less about the unbanked and more about finding smart ways of managing money across the financial solutions that best fit the environment. In Kenya, mobile money remains king, in Nigeria and Turkey, crypto is gaining significant traction, while in South Africa, regulations are placing crypto firmly in the investor space. That said, however, there are still challenges around regulations in Africa that are inhibiting uptake and that may yet put the brakes on the digital currency’s growth aspirations. As Claude-Nguetsop concludes: “Regulators are potentially not fully comfortable about the size of the risks and the instruments are not very liquid, but it’s worth noting that things are changing, and Africa isn’t left behind. The U.S., which is quite sophisticated, only allowed listings in January 2024. It will all be allowed on the continent; it’s just a matter of time because crypto is here to stay.”
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