The adoption of cryptocurrencies in Africa is still a contentious topic.
Africa also happens to be the smallest cryptocurrency market, with the quickest growth. This is due to the continent’s intermittent use of digital currency. For instance, out of the 46 Sub-Saharan African nations, Kenya, Nigeria, and South Africa account for a sizeable portion of all cryptocurrency transactions in the area.
Along with the uneven adoption of cryptocurrencies, African countries also share a common concern over the usage of a currency that is subject to few or no restrictions. Given the most recent failure of the third-largest cryptocurrency exchange in the world, FTX, and the following decline in the price of Bitcoin, Ethereum, and other important crypto assets, this anxiety is very real.
The use of cryptocurrencies is still a major source of disagreement in many markets in the region as a result. The recent FTX crisis has reignited the debate about government regulation of cryptocurrencies, and people are now less inclined to switch from their local currency to a digital one.
However, this discussion in Africa is likely to have minimal impact, at least in the near future, given that regional authorities just have a general skepticism of blockchain technology. The conflict of interest that developed in Nigeria during the #endsars period was proof of this.
The Nigerian government banned the usage of cryptocurrencies during the #endsars campaign, despite the people’s vain attempts to overturn this decision. If this is any indicator, it demonstrates that the people of Africa are prepared to embrace cryptocurrency use and are willing to face the risk, which is similar to the risk inherent in the stock market. Governments, however, are not.
“Policymakers are concerned that cryptocurrencies could be used to evade regional regulations intended to stop capital outflows and transfer money illegally out of the area. According to a research by the International Monetary Fund, widespread usage of cryptocurrencies “may also impair the effectiveness of monetary policy, raising concerns for financial and macroeconomic stability.”
The IMF also reported that six governments have outright outlawed cryptocurrencies, and two-thirds of Sub-Saharan African nations have enacted some type of cryptocurrency restrictions in the same report titled the October 2022 Regional Economic Outlook for sub-Saharan Africa.
The IMF’s implicit ban part includes nations that have certain limitations on the use of cryptocurrencies, whilst its explicit ban portion includes nations that have outright bans.
Six of these nations that specifically forbid the usage of cryptocurrencies are listed below;
- Sierra Leone
- The Republic of Congo