Can Africa Rethink its Financial Infrastructure Based on the Benefits of Cryptocurrencies?

Internet penetration in Africa stands at 39% compared to global penetration which stands at 55%.  To increase the adoption of blockchain technologies such as bitcoin, the continent should scale its internet infrastructure for inclusivity of wider audiences.  Bitpesa is Kenya’s decentralized company that is helping businesses and individuals to make bitcoin transactions locally and globally.


Businesses and individuals in Africa are ready to adopt cryptocurrencies. The numbers accelerated in 2020 making Africa the second-largest hub for peer-to-peer transactions, and two nations in Africa ranking among the top eight crypto destinations on Chainalysis’ adoption index.  

The continent’s financial and economic challenges could be the cause of increasing demand for P2P transactions and the use of cryptocurrencies. For example, it has been observed that the overall level of customer satisfaction in the local banking sector in Kenya is less than 60%.

The continued use of traditional banking products has been associated with E-banking, which contributes 45% customer satisfaction and is the second most important factor that people consider when choosing a banking product. Factor number one in attracting people to local banking products remains to be the cost of transactions .

A 2020 empirical study published by the World Bank Group observed that it is more expensive to send money to the Sub-Saharan African than any other part of the world. The report argued this was in part largely due to lack of competition, and on the inception of payment innovations such as crypto – the sector was becoming more and more affordable . Adoption of cryptocurrency and decentralized payments is eliminating the costs of international remittance. 

Remittance In-flows in Low-Income Countries

The accelerated increase in remittance flows to low-and-middle-income countries, as compared to foreign direct investment (FDI) could be in part, the catalyst for P2P payment usage . Low transaction costs on Peer-to-peer platforms is enabling Africa’s diaspora population of over 103 million to make small money transfers to their people living in the continent. 

The vast majority of Africa’s population have no access to banking services.   Existing mobile payment services nonetheless record-high registration numbers due to the simplicity of use. Safaricom’s mobile payment carrier M-Pesa is driving access to financial services for over 90% of Kenya’s population [6].  For instance, Kenya’s population affiliated to a financial service or product rose from 83% to 75% between 2016 to 2019,  the key driver for these numbers was mobile technology.

M-Pesa was only facilitating local payments, until 2018 when the mobile money service partnered up with Thunes and the US payment platform PayPal to facilitate convenient international money transfers for M-Pesa customers. 

While the partnership cut down transaction costs for moving Paypal funds into customer’s local bank accounts and reduced the 3-days withdrawal window imposed by banks; the system has still not been able to beat transactions speeds of cryptocurrencies such as Bitcoin and Ethereum, and negligent fee cost altcoins such as dash and litecoin. 

Record Volumes in Cryptotrading Volumes

However, the benefits of cryptocurrencies hugely depend on the mass adoption of cryptocurrencies across the continent.  “There is not a better place than Africa for Bitcoin to Thrive” Holds out Chris Maurice [8], co-founder and CEO of Yellow Card – A Nigerian -based bitcoin paymeCan Africa  Rethink its Financial Infrastructure Based on the Benefits of Cryptocurrencies?nt service tethered to major cryptocurrency exchange Binance.  Maurice and other Bitcoin proponents in the continent believe cryptocurrency will go mainstream in Africa before any other region across the globe. Presently, Nigeria leads the growth posting record transactions volumes of up to $10 million in 2020, followed by Kenya and South Africa’s $2 million volume.  Even so, Bitcoiners like me,  in the continent remain apprehensive of the increasing popularity of cryptocurrencies;  and fear it could attract more regulatory scrutiny from authorities; – a situation that is likely to inhibit innovation and squash further adoption.

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