Posted by: Dennis Wafula September 26, 2014
Africa has been recognized as the continent with the world’s fastest growing market for mobile phones. High mobile phone penetration, has spawned a myriad of opportunities for business due to the gadgets providing multiple functions that enable internet connectivity, data and voice communication, transfer of photos/video and money.
As financial services provision increasingly embrace more electronic transactions, The adoption of Bitcoin, a form of virtual currency, is equally moving at par with the new development not only in the developed world but also in the emerging markets. BItcoin platform rely on the Internet as the physical network for conducting financial transactions. Given that internet access has grown in Africa owing to use of smartphones, many people with access to internet via mobile phones stand a chance of adopting Bitcoin as a payment system.
South Africa’s Standard Bank began testing a Bitcoin-trading system, in February this year (2014) and so far one of the country’s biggest online payment gateways, PayFast, has announced acceptance of bitcoins as a payment method. Elsewhere on the continent , Bitcoin payment providers are in negotiations with leading banks in Kenya, Nigeria and Zimbabwe to introduce the system.
Mobile phones market analysts have indicated that mobile phone adoption on the continent is growing exponentially, recording an astounding rate of 30 percent annually between 2000 to 2010. Being a continent with a large number of unbanked people, mobile technology networks have opened a big door for many especially the marginalised groups such as rural dwellers, women , youth and the unemployed to access banking services.
Sarah Martin, Chief Executive Officer, Boone Martin, a global communications firm (2014), notes that collaboration between the public and private sector offers easier access to financial tools and equalized opportunity for market participation. Thus digitized payments such as Paypal and Bitocoin contribute to economic empowerment and allow for more inclusive development and growth. There is a strong link between mobile phone technology and digital payment such that mobile phone technology creates a platform for digital payment and banking while digital banking offers higher mobility to clients courtesy of possessing mobile phones.
Indeed like mobile money, Bitcoin enables payment for goods and services and send money to friends at home or family overseas. Since Bitcoin supports mobile money in the transition to a cashless economy and offers several unique features that may help the unbanked, who are millions in Africa, it is securing a place in the African digital currency market.
In linking mobile money transfer penetration one can also point out several areas, just like the mobile phones in which ones has own number,Bitcoin is a digital currency that trades freely across the globe using a decentralized, peer-to-peer network in which everyone has a personalized address and can send and receive money from their mobile phone. This is possible irrespective of whether one has a Smartphone or not thus freeing money services.
Mobile money transfer services in Africa such as Kenya’s Safaricom M-pesa and Airtel money have created a banking platform for millions of people, the same applies to other digital currency transfer solutions such as the internet based PayPal. Bitcoin also provides a banking solution by offering a safe and transparent payment platform for creating contracts, accessing liquidity, and developing credit and savings without a need for application process or barriers based on income level
As a result of mobile money transfers growth in Africa, people are used to instantaneous payments with less charges and given that sending money with Bitocoin is cheap as a result attractive to small businesses which are numerous in Africa, thus there is a potentially a high market. It is thus likely to cut money transfer costs for small businesses.
The growing number of African Diaspora communities in other continents who previously relied on costly services of money transfer companies also have an opportunity to reduce thanks to emergence of mobile phone linked money transfer services. According to Sarah Martin, Chief Executive Officer, Boone Martin, sending money with Bitcoin costs 1-3 percent in fees, whereas wire services charge 9-12percent. Thus families relying on overseas remittances from their kith and kin and who are already adopting mobile money transfer services are likely to adopt use of Bitcoin. This will lower the cost of sending money from overseas to Africa. Africa is hence primed to experience greater changes in international money transfers sphere.
The freedom of mobility brought by the mobile phone is replicated in Bitcoin use. Use of Bitcoin offers access to anyone, anywhere access to money. The taste of ‘freedom’ has already been acquired by potential users of Bitcoin in Africa courtesy of mobile phone use. Thus the ‘freedom’ aspect is set to drive the adoption of Bitcoin in Africa.
Just like the exponential development of mobile money in Africa, consumers are likely to embrace alternate currencies such as Bitcoin. This is because financial systems in many countries are in inefficient and charge small businesses and individual clients high service fees, challenges which Bitcoin and other digital currency are ready solutions.