Speculation over which country would be the next to adopt Bitcoin as an official currency has largely centred 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 favour of adopting it - but it may be that the rest of the continent has the most to gain from cryptocurrency.
One of the ways crypto can help CAR is that it can offer financial services to the vast majority of the population who are “unbanked”.
“The objective of Bitcoin and cryptocurrency is to cause disruption,” said Lacina Koné, Director General and CEO of Smart Africa, a pan-African institution endorsed 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 Rwanda’s president Paul Kagame.
“So this will continue. Cryptocurrency is just a matter of time. And what makes cryptocurrency very attractive also for Africa is that we have over 50 countries and that’s over 50 currencies,” he told Euronews Next.
But Koné also said that this means there are also more than 50 regulatory departments, which could be one of the main challenges for cryptocurrencies thriving on the continent.
Another issue for CAR is that only 4 per cent of the population has access to the Internet, according to WorldData, and access to electricity can be limited.
It means crypto mining and transactions can be impossible.
Koné pointed out there is also a difference between governments adopting cryptocurrency to be sold by the 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 government-controlled cryptocurrencies, known as Central Bank Digital Currencies (CBDCs).
Nigeria, which was once hailed as the second biggest Bitcoin market in the world after the United States, banned Bitcoin in 2021 and then launched its own CBDC, the eNaira.
The move to CBDCs come in the midst of a boom in fintech that has seen investment in these start-ups rise.
Africa's digital transformation
Almost $5 billion (€4.8 billion) was raised by African start-ups in 2021. Of this, 62 per cent of funding went to fintech companies, digital payments and other finance-related solutions, according to research company Briter Bridges.
“If you look at the recent developments in terms of mobile technology, talking specifically about mobile money is exactly the area where Africa should be striving, which is fintech,” said Koné.
“Africa is a mobile-first continent so you can really see where Africa should be really positioning itself for a competitive advantage and the landscape of the digital economy,” he added.
While Africa is thriving in the fintech sector, it is only through a digital transformation that the continent could catch up with other nations, argues Koné.
To achieve this, Africa will need to address its skills shortage.
Despite Africa boasting a young population, more education is needed to address a skills shortage partly caused by a brain drain, Koné said.
“We are talking about how we find difficulty in finding workers because tech is very fast but education is lagging. However, Africa has a huge opportunity for the young generations”.