Despite fears and skepticism over usage of virtual currencies for crime, tax evasion and money laundering, more African countries and individual investors are increasingly embracing cryptocurrencies to escape challenges to do with fiat money and to mop up extra value from informal markets that dominate the continent, according to a newly-published local report
Global Risk Insights has now said there are numerous opportunities for African countries to embrace cryptocurrencies. This comes “as more states in Africa come to accept cryptocurrency in a technology-first approach to digitizing and diversifying” their markets.
“This approach could enable African states to spearhead innovations such as block-chains for easier access to public services and digital currencies issued by central banks,” said Global Risk Insights.
The blockchain technology that bitcoin is built around has already been trialed in South Africa for use in financial transactions, with the country’s central bank saying the technology can help reduce the amount taken to complete transactions.
In Kenya, reported Bloomberg on Thursday, blockchain technology has already been deployed to “enable credit scoring of small businesses,” therefore allowing them access to micro loans through their mobile phones under a partnership between start-up company Twiga Foods and IBM.
The interest in blockchain and cryptocurrencies in Africa is spread out across markets running from Zimbabwe to Kenya and into West Africa. According to the Global Risk Insights report, the “most important factors that have influenced the development of Africa’s cryptocurrency market is its large informal” sector.
The International Labour Organization estimates that more than 66% of all employment in Sub-Saharan Africa is in the informal sector. The high rates of unemployment in some African countries could also be pushing innovators to the edge to create blockchain and cryptocurrency solutions and platforms.