Posted by: Dennis Wafula October 7, 2014
With a population of over one billion people and comprising over 50 countries, Africa as a continent is a fertile ground for the growth of the digital currency market.
However, the continent is one of contrasts with countries being at different levels of economic and Information infrastructure development, more so in the sphere of Information and Communication Technologies (ICT). For example a country like South Africa has advanced financial systems, high penetration of internet connectivity and mobile phone usage compared to Sierra Leone or Mozambique.
It is irrefutable that mobile networks in some African countries have enabled individuals and small businesses to undertake financial transactions more than the banking industry. Kenya’s M-pesa, and EcoCash in Zimbabwe, are just but good examples. Kenya, seen as Africa’s leader in internet growth is already using digital currency market platforms such as PayPal.
Use of mobile phones for money transfer is thus a better entry for the introduction of the Bitcoin system and other digital currency platforms. Hence, countries which have adopted mobile phone money transfer systems are better placed to adopt the Bitcoin system by utilizing features on phones. Clients with phones can receive bitcoins on their phone numbers in case they are introduced.
Most people in Africa have no access to international banking and access to the internet is heavily restricted to those with smart phones and thus cannot get bitcoins from online exchanges. However, mobile payments that work on standard-feature phones have already made strong inroads in Africa, with 16 percent of Africans using the services.
In relation to internet access that could boost adoption of Bitcoin system, availability of affordable smart phones is enabling many people to enjoy online connectivity with 70 percent of those who access the internet doing so via mobile phones and related devices , compared with just six percent who use desktop computers.
Countries that have experienced a digital revolution leading to advancement in Information and Communication Technology (ICT) have done so due to sound policies that encourages development of the ICT sector and availability of infrastructure such as fibre optic cable connectivity. A good example is the African undersea cables that connect the continent with the rest of the world. Availability of human resources capacity such as technicians with ICT skills has been a boon to countries that have heavily invested in that sphere. Another propelling factor has been a relatively developed financial system that has spawned growth of the digital currency market. These countries are Kenya, South Africa, Ghana, Seychelles, Tunisia (one of the leading ICT countries in the world) Morocco and Zimbabwe.
Singling out South Africa, the country already has a startup called Xoin that is earmarked to drive bitcoin adoption by introducing prepaid vouchers/gift cards that enable people to buy the digital currency with cash. It involves customers using their smart phones to scan the code and redeem bitcoins. According to Paymenteye publication, PayFast, another South African payment Gateway has introduced, (in September 2014), bitcoin integration to over 30,000 of its e-commerce clients in the Southern African Country. Some financial institutions in South Africa such as Standard and Chartered Bank have done a pilot introduction of the Bitcoin system but are yet to adopt it.
In the case of Kenya, the Communication Authority of Kenya noted in 2013 that the country has 30 million mobile phone subscribers out of a population of 41 million. Kenya financial market is the most advanced in East Africa and it has a population that is dynamic and eager to adopt new ideas and products in the digital currency market; aspects that are conducive for adoption of bitcoins. This is in contrast with its North Eastern neighbour, Ethiopia whose economy is growing faster and has a huge population of 80 million people yet its pace of ICT adoption and the growth of its digital currency market is at a snail’s pace.
Sub Saharan Africa, according to Africa Renewal, a publication produced by the Africa Section of the United Nations Department of Public Information, has more than 754 million connections and over 35 mobile network operators. Several countries, on the continent such as Seychelles, Tunisia, Morocco and Ghana, have mobile subscription penetration rates in excess of 100 percent. Tunisia is unique in that has 120 percent, mobile phone connections making it to boast of s 10.8 million more cell-phone connections than it has citizens population.
Ghana on the other hand has a recent encounter with mobile money. The phenomenon is relatively new in the West African country. According to Philip Agyei Asare in his article ‘Bitcoin Versus Mobile Money In Ghana’ published this year in Lberty.me, mobile money was introduced in Ghana just five years ago by the mobile phone company MTN and the country has only five million users. The figure of registered mobile money service users stands at two million in a population of an estimated 25.9 million people. Apart from MTN, another mobile phone company, Airtel has followed suit and introduced Airtel money.
Asare is of the view that as far as the digital currency market is concerned, Ghana, offers huge opportunities for bitcoin transactions. Given that mobile money market in the country has taken off, the Bitcoin system could be an alternative or supplementary to mobile phone payment system. Ghana too has a poor banking infrastructure yet mobile phone penetration is rapidly growing, the Bitcoin system stand a chance of being adopted.
For Zimbabwe which some seven years ago suffered inflation leading to the abandonment of its currency, experts argue bitcoins use offer a big potential for improvement. The country has a Smartphone penetration rate between 11 percent and 20 percent, while Internet penetration rate is around 47 percent. Given that bitcoin client needs internet access to make transactions, this could be smoothening the way for adoption of the system.
Seychelles, on the other has internet penetration of 50.4 percent making it among the highest in Africa while Tunisa has 43 percent. The two countries have a highly developed baking and financial infrastructure and a tourism dependent economy to which the digital currency transfer is essential. The two countries boast of high literacy levels among their people, an ingredient for adoption of new technologies in the sphere of ICTs and financial markets.
For the case of Morocco, another North African country like Tunisia, access to mobile services exceeds that of the access to banking services. Particularly, the mobile services access which is about 70 percent while that of the banking services is about 40 percent according to the International Telecommunication Union, IFC). The yawning gaps have offered opportunities for the launching and expansion of the M-money in Morocco and other platforms such as bitcoins.
As with other regions, Africa also faces the threats posed by internet security and privacy issues. In fact the adoption of bitcoins has been slow even in countries with advanced systems like South Africa due to misconceptions about the safety of the crypto-currency and a lack of accessibility.
But one can conclude that with several countries showing positive signs on the road towards adoption of the Bitcoin system, the future is bright.