African Crypto Adoption At Record Heights Despite Lacking Regulation And Government Support

Africa, the second-largest continent globally, with more than 1.5 billion people, is gradually reinventing itself. Following decades of neglect, socioeconomic problems, civil wars, and poor governance, the majority of the people residing in African countries have continuously suffered from a lack of access to financial services.

The lack of proper banking and financial services isn’t just limited to one or two African countries. Instead, it is a continent-wide problem that has led to more than 57% of the general population remaining unbanked.

As a result, many Africans are choosing cryptocurrencies as a means to assure greater financial stability. Even though governments and regulators haven’t yet opened up to this emerging asset class, the growth of crypto adoption across the African region is staggering. Per a dated report issued by Chainalysis, crypto users within African nations drove a staggering 1,200% growth in transaction volumes between July 2020 and 2021. 

An Astonishing Growth Trend

Despite being relatively small economies, African countries like Nigeria, Kenya, Tanzania, Ghana, and South Africa rank among the top 20 countries in the Global Crypto Adoption Index. While most of these are emerging crypto markets, they exhibit substantial transaction volumes on peer-to-peer (P2P) platforms. 

Another report by crypto exchange KuCoin shows that the number of crypto transactions across Africa has increased by almost 2,670% in 2022. Accordingly, the total number of crypto transactions in Africa accounts for roughly 2.8% of the global transaction volume. The report further states that 88.5% of African cryptocurrency transactions are cross-border transfers.

An increasing number of young and tech-savvy Africans are using digital currencies to send remittance payments back home. This is because crypto transactions cost less than traditional models. In most cases, users pay as little as 0.01% of the total amount they are transferring. Likewise, a large number of freelancers have also started accepting crypto payments, thereby adding to the ongoing crypto adoption momentum.

Zambia: The New Epicenter Of Fintech Revolution

Bitcoin (BTC) and other cryptocurrencies have become immensely popular in Africa for several reasons, with financial stability at the forefront. Inflation and a lack of technological infrastructure have severely affected the value of local currencies like South Africa’s Rand and Nigeria’s Naira, thereby driving citizens to opt for alternative currencies to secure their assets.

According to a recent study by cryptocurrency exchange AAX, Africa is currently getting a lot of praise and support from the global crypto community. In most ongoing discussions about making crypto more mainstream, countries like Nigeria, Zambia, Ghana, Kenya, and South Africa are increasingly valued as key markets for financial innovation. In line with this, a wave of investors and crypto-focused projects are eager to invest in these African countries in a bid to position them as the next big frontiers of the decentralized financial revolution.

For instance, Ethereum co-founder Vitalik Buterin believes that Zambia has the potential to become the epicenter of a new wave of financial empowerment for the African continent. Although rich in natural resources like copper, Zambia lacks severely in terms of technology. However, a group of young cryptopreneurs, with support from Vitalik Buterin, are all-set to change Zambia’s image.

Earlier this year, Vitalik extended his support to address the growing issues of regulations that are limiting both local and international crypto-focused projects to expand in Zambia and the African continent. Following his recent visit to Zambia as a guest of Finance Minister Situmbeko Musokotwane’s son Mwiya Musokotwane, Vitalik participated in a virtual meeting with Zambia’s President Hakainde Hichilema to create a strong regulatory framework that can help Zambia position itself as the fintech hub of Africa.

Fresh reports indicate that several crypto-centric companies, such as the prominent African fintech Flutterwave Inc., are preparing to enter the Zambian crypto market. Additionally, the Zambian government is also warming up to the idea of cryptocurrencies and working on setting up the necessary framework to establish a dedicated Ministry of Technology and partnering with crypto industry leaders.

Though still in its infancy, this strategy is already showing promising results for Africa’s broader fintech sector, with several Zambian startups receiving support and funding from renowned VC firms and angel investors. For instance, the Zambian fintech firm Union54 recently raised $12 million in a seed funding extension round led by Tiger Global.

To better understand how the Zambian crypto landscape is developing and what the growth could look like in the near future, it is essential to look at the status quo. In recent months, several prominent crypto brands made their debut in Zambia, with most of them tasting some level of success. Nigeria-based crypto exchange YellowCard recently enabled Kwacha (ZK) deposits – the basic monetary unit of Zambia and Malawi – thereby enabling Zambian crypto users to buy and sell BTC and USDT using their local currency.

Following this, there has been a breakout in Google search volume for the keyword “YellowCard,” with current Google Trends data indicating that user interest related to YellowCard was at its peak in March 2022. Meanwhile, peer-to-peer trading analytics platform Useful Tulips suggests that there has been a massive surge in trading volume in Zambia, especially on crypto platforms Paxful and LocalBitcoins.

The Bank Of Zambia (BoZ) released a fresh statement concerning the heightened interest in digital currencies country-wide in another positive move. However, unlike previous statements made by other central banks across Africa, BoZ didn’t direct citizens and traditional financial platforms to completely disregard cryptocurrencies. Instead, they clarified that there are currently no regulations in place and that people should foray into digital assets at their own risk. That said, the Bank of Zambia also stressed that it is working to implement new regulations that will facilitate innovation – a welcome move for crypto startups emerging across the African continent.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice