What Factors Are Driving the Bitcoin Remittance Revolution in Africa? This one

The Bitcoin remittance business is booming all over the world. South African financial website money web brings us the report straight from the oldest continent. The circumstances that led El Salvador to make Bitcoin legal tender are all over Africa. The people don’t have a bank account, but everyone has cell phones. Moreover, the diaspora is huge and constantly sends money home while big corporations blindly rob them with high fees.

Related literature | Is largely unbanked Africa ready for Bitcoin adoption?

“The African continent has many opportunities for widespread Bitcoin adoption. One such option is remittances fueled by Africa’s growing ~mobile~ population. More than 30 million Africans live outside their country of origin. Since 2012, the African Union has considered the African diaspora to be the sixth largest region of Africa.”

On the one hand, “countries such as South Africa, Nigeria and Kenya” want to regulate bitcoin and other cryptocurrencies. On the other hand, “According to the World Bank Global Findex, 60% of the population” on the continent does not have a bank account. The recipe is here. And Bitcoin remittances could be the use case to bring mass adoption to Africa.

Remittance Revolution, Factor 1. Mobile Wallets

Not only is the mobile population growing, but the entire continent also has extensive experience with other forms of ‘mobile money’. It is a concept that is already embedded in the culture:

“Africa is the world leader in mobile money usage. Sub-Saharan Africa has the fastest growing mobile money industry in the world. The region will continue to see substantial growth in the number of people owning a cell phone. Mobile subscribers in Sub-Saharan Africa are expected to reach 623 million by 2025, half of the continent’s population. The figure will be even higher because of the cell phone sharing culture.”

From there to using Bitcoin, the most efficient money network in the world, it’s just one step. The way is clear.

Factor 2. Government Policy

Inadvertently, governments across the African continent are encouraging Bitcoin adoption with their restrictive policies. For instance

“In 2020, the Central Bank of Nigeria was suspended international mobile money transfers to Nigeria. The suspension came after the banking regulator allowed payouts in US dollars for international transfers in the country.” And that “means that only Nigerians with a bank account can receive money from abroad. Not all international money transfer services to Nigeria support cash payouts.”

What have the Nigerians done? Go to Bitcoin transfers, of course.

Another example:

“In Zimbabwe, several restrictive monetary policy measures have fueled the growing interest and use of bitcoin for money transfers. First, the government banned all foreign currencies, such as the US dollar, euro, South African rand and others. The government also imposed restrictions on mobile money services as well as daily withdrawal limits due to severe shortages of fiat currency. To get around this restrictive central bank policy, a growing number of Zimbabweans prefer bitcoin transfers over fiat money.

Remittance Revolution, Factor 3. Weak currency

This factor was not present in El Salvador, which is a dollarized country. In Africa, however, there are several “countries experiencing double-digit inflation, such as Zambia, Zimbabwe, Nigeria, Sudan, South Sudan, Ethiopia, Liberia, and Sierra Leone.” For instance:

“The Guinean franc is one of the weakest currencies in the world as we enter 2022. In 2020/21, the Zambian kwacha and Zimbabwean dollar were among the worst performing currencies in the world. The Nigerian naira has lost more than 50% of its value since 2015. The Central Bank of Nigeria devalued the naira three times in 2019. In May 2021, the central bank devalued the naira by 7.6%.”

What have the Nigerians done? Adopt Bitcoin transfers. What will the other countries do? Also adopt Bitcoin transfers.

Factor 4. Transfer costs and speed

The wire transfer fees were a prominent factor in the El Salvador story. And in Africa the story repeats itself:

“A study by the World Bank shows that transfer fees to Sub-Saharan Africa, the poorest region in the world, the highest in the whole world. The cost of shipping $200 to Sub-Saharan Africa by the end of 2020 averaged 8.2%. Sending money within Africa is even more expensive.”

What will all of sub-Saharan Africa do?

Remittance Revolution, Factor 5. Education

This is a positive one, for a change. According to Abubakar Nur Khalil of BTrust, in a recent article for Bitcoin Magazine

“Africa is home to over a thousand indigenous languages, with non-English speaking countries. Most of the Bitcoin material available is in the English language, which means we also need to make translation efforts to unlock knowledge for millions of non-English speakers across the continent, both on the developer and user side.

Currently, there are efforts across Africa to translate Bitcoin material into different languages ​​such as Amharic, Arabic and Wolof by Kal Kassa Arabic_HODL and Fode Dioprespectively, with work in progress on others.”

Related literature | South African Man Loses $900,000 in Bitcoin After Accidentally Deleting Keys

And we should also mention Exonumia, which “creates open source African language translations for Bitcoin literature through community.” And of course, the BTrust† The organization founded and funded by Jay-Z and Jack Dorsey is on a mission to promote the development of Bitcoin in Africa and India. One of the board members, Abubakar Nur Khalil, recently spoke to Bloomberg Technology about the initiative.

Conclusions and the market

There are negative factors that positively influence Bitcoin, such as high fees, weak currencies and poorer government policies. And there are positives, such as high mobile adoption and available education. The mix could form a perfect storm for Bitcoin adoption in Africa. And the Bitcoin remittance revolution is leading the way.

BTC price chart for 02/10/2022 on Bitstamp| Source: BTC/USD on TradingView.com

After a recent wave of sorts, Bitcoin has been trading horizontally for the past few days.

Featured image by James Wiseman On Unsplash † Charts by Trading Display

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