Speculation over which country will be the next to adopt bitcoin as an official currency has focused largely on Central and South America, following El Salvador’s move seven months ago to become the first country to make the cryptocurrency legal tender.
It would actually be the Central African Republic (CAR) that became the second country to vote in favor of adopting it – but it may be that the rest of the continent benefits the most from the cryptocurrency.
One of the ways that Crypto CAR can help is that it can provide financial services to the vast majority of the “unbanked” population.
“Bitcoin and cryptocurrency are intended to create disruption,” said Lasina Kohn, director general and CEO of Smart Africa, a pan-African institution backed by the African Union.
The group works to enhance the digital landscape in Africa and works with the private sector and governments. It is also the brainchild of Rwandan President Paul Kagame.
“So it will continue. Cryptocurrency is just a matter of time. And what makes cryptocurrency very attractive to Africa as well, is that we have over 50 countries and it is over 50 currencies,” he told Euronews Next told.
But Kohn also said that this also means there are more than 50 regulatory departments, which could be one of the main challenges for cryptocurrencies that are thriving on the continent.
Another issue for CAR is that according to WorldData, only 4 percent of the population has access to the Internet, and access to electricity may be limited.
This means that crypto mining and transactions may be impossible.
Koone pointed out that there is also a difference between governments adopting cryptocurrencies sold by government and national banks, and free-floating cryptos such as bitcoin, which are not owned by anyone.
Since 2018, several African countries have launched initiatives to create a government-controlled cryptocurrency, known as a Central Bank Digital Currency (CBDC).
Nigeria, once known as the world’s second largest bitcoin market after the United States, banned bitcoin in 2021 and then launched its own CBDC, eNaira.
The CBDC move comes amid a boom in fintech, which has seen a surge in investment in these start-ups.
Africa’s digital transformation
About $5 billion (€4.8 billion) was raised by African start-ups in 2021. According to research firm Britter Bridge, 62 percent of this funding went to fintech companies, digital payments and other finance-related solutions.
“If you look at the recent developments in terms of mobile technology, talking about mobile money in particular is precisely the area where Africa should strive, which is fintech,” Koene said.
“Africa is a mobile-first continent, so you can really see where Africa really needs to position itself for the competitive advantage and digital economy landscape,” he said.
While Africa is flourishing in the fintech sector, it is only through a digital transformation that the continent can catch up with other countries, argues Kohn.
To achieve this, Africa will have to overcome its skill deficit.
Kohn said that despite Africa having a young population, more education is needed to address the skill deficit partly caused by a brain drain.
“We are talking about how we have difficulty in finding workers because technology is very fast but education is lagging behind. However, Africa has huge opportunities for the younger generation.”