Editor’s note: The following is a transcript of the accompanying video. ©2020 Thomson Reuters.
Africa is experiencing a quiet boom in the use of cryptocurrency. Over the last year, crypto transfers by individuals and small businesses soared by over 40% to a whopping $315 million in June. That’s according to US blockchain research firm Chainalysis.
Reuters Nigerian bureau chief Alexis Akwagyiram [said]: “This trend is primarily being driven by small businesses. That’s because, over the course of the last year, currencies across the continent have become weaker and weaker. And as that happens, it becomes harder and harder to get hold of dollars, which are the currency of global trade. To get round this, what small businesses are doing across Africa is to use bitcoin. And in doing so, they are able to interact directly and trade directly with partners in other parts of the world.”
Users say cryptocurrencies are helping people make their businesses quicker, smoother, and more profitable. This has been the case in Nigeria, in particular, which has seen a massive uptick in the use of bitcoin.
[Phone trader] 30-year-old Abolaji Odunjo is one of the people at the heart of a quiet boom for bitcoin in Africa’s largest economy. [He said]: “We trade with bitcoin which is a very easy way of doing business because with bitcoin, you don’t have to pay charges, you don’t have to buy dollars, you don’t have to convert your naira to dollars before you buy.”
Nigeria’s small crypto transfers totalled over $55 million in June. The number of transactions also soared, jumping more than 55% to 120,000. The reason? The country’s oil-dependent economy was rocked by low global crude prices and lockdowns, which in turn has weakened the local currency.
[Akwagyiram said]: “The Nigerian naira currency has been devalued twice so far this year, and it’s increasingly hard for businesses here in Nigeria to get hold of the dollars they need to trade with global partners. To get around this, businesses are using bitcoin. In a continent where there are massive informal economies, this is something that can help businesses to grow.”
But even as bitcoin usage widens, there are some serious risks for its growing army of crypto users. Bitcoin’s legal status remains unclear in many African countries, and converting local currencies to and from bitcoin still relies for many on informal brokers.
[Akwagyiram said]: “Across the continent there is little to no regulation whatsoever when it comes to cryptocurrencies. That means that there’s potential risk because you could be exposed to a scammer if you’re a business person, and then you have no recourse to seek help from authorities because of that lack of regulation.”