Africa is emerging as a key player in the global cryptocurrency space, with countries like Nigeria and Kenya at the forefront of leveraging digital currencies. By adopting blockchain technology, these nations are actively addressing long-standing financial challenges, such as limited access to financial services, and paving the way for a more inclusive and efficient financial system.
According to the World Economic Forum, as of 2021, Africa received approximately 2% of the global cryptocurrency value, yet the continent’s growth rate in this sector has been significant. Between July 2020 and June 2021, Africans received cryptocurrency payments worth $105.6 billion, representing a 1,200% increase from the previous year. This surge underscores the rising influence of cryptocurrency in Africa, driven largely by peer-to-peer transactions, remittances, and business adoption.
Sub-Saharan Africa has the smallest crypto economy of all global regions, accounting for 2.3% of global transaction volume between July 2022 and June 2023. During this period, the region received an estimated $117.1 billion in on-chain value. Despite its smaller share, the region’s growth in cryptocurrency usage remains noteworthy.
Bitcoin has seen a remarkable increase in value, rising over 11,000%, while the Kenyan Shilling (KES) has depreciated by 7% over the same period. In 2017, the Central Bank of Nigeria (CBN) banned all banks from using, holding, trading, or transacting in cryptocurrencies, reflecting the cautious approach taken by some African regulators.
Chainalysis reports that Sub-Saharan Africa’s retail market and peer-to-peer (P2P) usage are unique. Approximately 6.4% of the region’s transaction volume consists of small retail transfers below $10,000, the highest proportion globally. Retail transfers constitute 95% of all transactions, with 80% of these being small transfers under $1,000, highlighting the widespread use of cryptocurrencies for everyday transactions.
Cryptocurrency’s Contribution to Africa’s GDP
Cryptocurrency has begun to make notable contributions to Africa’s Gross Domestic Product (GDP). While exact figures vary, estimates suggest that the cryptocurrency sector contributed approximately $2 billion to Africa’s GDP in 2023. This contribution is expected to grow significantly, with projections indicating a potential increase to $10 billion by 2028. The growth is driven by rising adoption rates, regulatory advancements, and the expansion of blockchain-based financial services.
Adoption and Demographics
The adoption of cryptocurrency in Africa has been remarkable, with an estimated 100 million individuals engaging with digital currencies across the continent as of 2023. Nigeria stands out as the leading market, with over 50 million crypto users, followed by Kenya with approximately 20 million users. Factors contributing to this surge include limited access to traditional banking services, high remittance costs, and the tech-savvy nature of the youthful population.
Governments across Africa are increasingly recognising the potential of cryptocurrencies and blockchain technology. Countries like Nigeria and Kenya have implemented regulatory frameworks to oversee digital currency transactions, aiming to balance innovation with financial stability. For instance, the Central Bank of Nigeria has introduced guidelines to regulate crypto exchanges, ensuring consumer protection while fostering industry growth. Similarly, Kenya’s regulatory approach encourages blockchain innovations that can enhance financial services and economic development.
Attracting International Investment
Africa’s burgeoning cryptocurrency sector has attracted substantial international investment. Venture capital firms and global investors are increasingly funding African crypto startups, recognising the continent’s potential for high returns and impactful innovations. Investments are being channelled into various segments, including cryptocurrency exchanges, blockchain infrastructure, and decentralised finance (DeFi) platforms, fuelling further growth and technological advancements.
Success Stories of African Crypto Startups
Several African companies are driving cryptocurrency adoption and innovation. For example, Bundle, a Nigerian wallet, has simplified the buying, selling, and transferring of digital assets with user-friendly interfaces and robust security features. BitPesa, a Kenyan company, uses blockchain to streamline cross-border payments, reducing costs and increasing speed for businesses and individuals. This has improved remittances and international trade across Africa. Flutterwave, a Nigerian fintech company, has integrated cryptocurrency solutions to enhance its payment platforms, enabling seamless transactions across different currencies and blockchain networks. In South Africa, BitHub is focused on blockchain education and development, nurturing a community of developers and entrepreneurs who are driving innovation across the continent.
Future Projections
According to Statista, the cryptocurrency market in Africa is projected to reach a revenue of US$3.1 billion in 2024, with a slight decline to US$2.9 billion by 2025. The average revenue per user is estimated to be US$57.0 in 2024, with the number of users expected to reach 53.89 million by 2025. While the global market is dominated by the United States, with a projected revenue of US$9.8 billion in 2024, Africa’s market shows steady growth and promising potential for future development.
African fintech startups have raised over $2.7 billion in the last two years, and it is anticipated that the sector will generate $230 billion in revenues by 2025. However, fintech companies using cryptocurrency remain in the minority.
The African continent is poised for significant growth in the cryptocurrency space, with forecasts suggesting a projected GDP contribution of up to $10 billion by 2028. This growth is driven by the increasing adoption of blockchain technology across various industries, including finance, supply chain management, and healthcare. Furthermore, the number of crypto users is expected to surpass 200 million by 2028, solidifying Africa’s position as a major player in the global cryptocurrency landscape.
Benedict Oramah, President of Afreximbank, has emphasised the importance of embracing cryptocurrencies in Africa, highlighting their potential to revolutionise remittances, trade, and investment. He stresses that digital currencies are essential for Africa’s future in the global digital economy.
