Africa is emerging as a significant player in the global landscape of cryptocurrency. The adoption of these in Africa has been a topic of growing interest, with several African presidents weighing in on the potential of cryptocurrencies, particularly Bitcoin.
Of course, it's no news that the governments of many African nations are not big fans of blockchain technology. Some African countries like Cameroon, Lesotho, and Tanzania have completely banned implementing crypto-related use cases.
However, some other African nations appear to be more friendly to the concept and are constantly making new policies to accommodate the crypto industry.
Let's look into their different perspectives on the subject of Bitcoin and the broader implications for Africa's crypto adoption.
South African President Cyril Ramaphosa expressed his support for a single African currency, suggesting that it could be digital. During the African Union summit held in Kigali, where 44 countries signed the African Continental Free Trade Area (AfCFTA) agreement,
President Ramaphosa stated that the idea of a single African currency was gaining traction among business leaders. He acknowledged that the concept of a digital currency, possibly preceding a physical single currency, was under consideration, emphasizing the ease of implementing a digital currency compared to a traditional one.
While the idea of a single African currency has faced resistance in the past due to concerns about economic sovereignty, President Ramaphosa believes that people are now looking beyond national borders, contemplating the benefits of a unified currency for the continent.
The prospect of a single African currency, initially proposed in 1991 through the Abuja Treaty, is gaining momentum and could have significant implications for Africa's economic landscape.
Kenya's Finance Ministry, the National Treasury, has put forward a proposal to levy a 3% tax on the transfer of digital assets in the upcoming budget year. This development comes as the nation gears up to present its budget on June 8, according to a recent report by Bloomberg.
Kenya's stance on cryptocurrency has been under the spotlight since the election of President William Ruto in 2022, as Kenya's economy weakened.
When William Ruto assumed the presidency, Kenya did not have any established crypto regulations. President Ruto's stance on cryptocurrency was perceived as more crypto-positive compared to his electoral opponent, Raila Odinga. However, throughout 2022, Kenyan lawmakers began considering a bill aimed at regulating and taxing crypto exchanges, digital wallets, and digital asset transactions.
The proposed tax on digital assets marks a huge step, though it does not necessarily equate to a full legitimization of the crypto space. This move echoes similar actions taken by other nations in recent times, reflecting a growing trend of governments seeking to gain oversight of the crypto sector.
The President of Ghana has not taken a position on this issue; nevertheless, Vice President Mahamudu Bawumia has recently advocated for African governments to consider digital currencies as a way to boost intra-African trade and streamline cross-border payments.
Bawumia has voiced his support for the e-cedi project of the Ghanaian central bank, emphasizing the importance of granting the project the requisite credibility and legal support.
Additionally, Bawumia highlighted the potential of the Pan African Payment and Settlement System (PAPSS) in simplifying cross-border transactions and reducing dependence on third-party currencies. PAPSS aims to establish a low-cost, risk-controlled payment clearing and settlement system that promotes trade and economic activities across the continent.
Ghana's digitization policies, particularly in response to the challenges posed by the COVID-19 pandemic, have emphasized the role of mobile money and digital platforms in financial inclusion. Bawumia's advocacy for digital currencies underscores the growing recognition of their significance in promoting economic growth and trade within Africa.
Central African Republic
President Faustin-Archange Touadéra of the Central African Republic caught the world's attention with a cryptic tweet, invoking the Latin motto "vires in numeris" or "strength in numbers." This motto is well-known in the world of Bitcoin, the largest cryptocurrency. It left outsiders speculating that this relatively obscure tweet signaled the country's embrace of Bitcoin.
In April 2022, the country made headlines by becoming the first country in Africa and the second in the world, after El Salvador, to adopt Bitcoin as legal tender.
Despite facing sustained periods of economic instability and political violence, the Central African Republic harbored high hopes for Bitcoin and its counterpart experiment, Sango - a blockchain project aimed at tokenizing land and natural resources. Digital currencies were seen as part of a new "visionary plan" that promised to unlock "new opportunities."
This move stirred the excitement of Bitcoin enthusiasts in the U.S. and Europe, who eagerly anticipated a second test case for Bitcoin adoption. However, many questioned the feasibility of this project in a country where 90% of citizens lacked access to the internet. Nonetheless, the Central African Republic's decision was seen as a crucial test case for the nascent financial technology.
The decision to repeal the law allowing Bitcoin adoption signaled the end of the Central African Republic's experiment before it could truly begin. The failure of Bitcoin adoption in the country can be attributed to more than just poor infrastructure, low internet penetration, and a population unfamiliar with Bitcoin.
In Nigeria, the President has yet to adopt a stance on this matter. However, there is optimism among stakeholders in the blockchain industry that the restriction on cryptocurrency trading imposed by the Central Bank of Nigeria (CBN) may be lifted by President Bola Tinubu's administration.
The CBN had banned cryptocurrency transactions between banks and crypto exchanges in 2021, and despite recent developments in blockchain and cryptocurrency policy, the restriction remains in place.
President Tinubu, in his 2022 presidential manifesto, expressed his intention to reform government policies related to blockchain and cryptocurrency to create a more business-friendly regulatory framework.
Industry experts anticipate that by 2024, the Nigerian government may allow cryptocurrency trading without restrictions. They highlight the importance of the government officially declaring crypto as legal and establishing a framework for its regulation. However, concerns remain about how banks and financial institutions will participate in cryptocurrency trading and whether regulations will address illicit activities while fostering legitimate crypto trading.
Fostering a Crypto-Driven Future: Opportunities and Caution
Africa's relationship with cryptocurrencies is emblematic of a continent on the brink of financial transformation.
As blockchain startups gain traction and crypto adoption rises, Africa stands poised to become a global blockchain hub. However, careful regulation and education are imperative to harness the full potential of these technologies.
At the heart of this transition lies the need for inclusive financial systems that bridge gaps, empower individuals, and stimulate economic growth.
Africa's journey towards crypto adoption represents a pivotal moment in the continent's economic trajectory, one that could reshape its financial landscape for generations to come.