Going by the current pattern of use, early adopters of the world’s leading digital currency in Africa will be small business and users who have realised its effectiveness to make cross-border transactions and to tap into the global financial system, the co-founder of a crypto-currency exchange focusing on Africa has said.
Chankura.com’s Thabang Mashiloane said there has been a growing demand for bitcoin in most African countries and it is mainly for remittances which is now a huge market especially between South Africa and other African countries.
“We have seen a massive demand for bitcoin in most African countries for remittances. We’ve had inquiries from different people across Africa including Mozambique, Ghana and Zimbabwe as we are transacting between South Africa and Nigeria through our remittance platform GeoPay,” said Mashiloane.
Bitcoin use in parts of Africa is still considered to be relatively low. Several factors are attributed to this slow embrace including bitcoin’s association with the digital age, its negative stigma as a form of currency and uncertainty around its regulations.
However, figures from CoinDance show that weekly trading volumes on the LocalBitcoins platform which facilitates over-the-counter trading of local currency for bitcoins have – at some point this year – reached ZAR16.3 million (approximately US$1.18 million) and KES10.6 million (approximately US$105,000) in South Africa and Kenya respectively.
Mashiloane cites the pattern of bitcoin use elsewhere in Africa:
“In countries like Ghana, it’s the geeks that are interested in bitcoin for buying stuff online. In Zimbabwe, it’s mainly remittances. Similar to Mozambique, they want to transact between there and Portugal for some reasons. In Nigeria, small business want to buy raw material from outside their country like China for example.
“Different countries have different needs, but most of the bitcoin early adopters in Africa will come from small business that also trade outside their countries I believe. Remittances from South Africa to other African countries is a huge market. $128 billion is currently flowing. This is a known figure. Most of the remittances from South Africa to other African countries is informal (flows through taxis and buses) and it’s unknown.”
According to EY’s attractiveness survey Africa 2015, capital investment into Africa between 2013 and 2014 surged to US$128 billion, up 136% and FDI created 188,400 new African jobs, a 68% increase.
Mashiloane said that with ±13% of the US$128 billion flowing within Africa in remittances – mostly from South Africa to other countries with Zimbabwe being the largest receiver at 58%, the large number of the unbanked Africans living outside their home countries would be served when the limitation created by the lack of infrastructure for blockchain/bitcoin use cases by most African countries is addressed.
Since less than four African countries have bitcoin exchanges in Africa, he said the limitation compels remittance companies like BitPesa to partner with an existing infrastructure company to make bitcoin services available and new startups like Chankura are working to cater for such a need.
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