Why Africa could be the next frontier for cryptocurrencies
The use of digital currencies, which have been on the receiving end of central banks in Africa, has started to gain acceptance by key decision-makers in Kenya’s financial system. Equity Group Holdings Plc CEO James Mwangi is the latest high ranking officer in the sector to soften his position on cryptocurrencies.
This comes after National Treasury Cabinet Secretary Ukur Yatani underscored the role of Cryptocurrencies in driving financial inclusion.
Speaking during the Bloomberg Invest: Focus on Africa Conference, Mwangi said Africa can leapfrog to the fourth industrial revolution technologies.
“Cryptocurrencies can as well complement the mobile money wallet, but essentially we need to talk to regulators,” said Mwangi in what appeared to be a challenge to the otherwise hardline stance by regulators in Africa.
He said that mobile money in Kenya grew because the regulator was willing to experiment with new technology. “In the same way, the use of technology can help increase Africa’s competitiveness because the continent lacks legacy systems,” the Equity Group boss said.
Apart from the Central African Republic which has adopted digital assets, and the South African Reserve Bank which is currently setting up rules to protect investors, other central banks in the continent have warned against cryptocurrency deals.
Three months ago, Central Bank of Kenya (CBK) Governor Patrick Njoroge also appeared to have softened his stance on the issue when he said that crypto trading will only be allowed in banks when proper safeguards are put in place.
When asked about the matter, Treasury Cabinet Secretary Ukur Yatani said the technology cannot be ignored but more research is needed in the sector.
“Nothing is impossible, with technology, sometimes you resist it but it is a discussion, there are things we need to understand more,” he said.
According to reports from a World Bank-funded Chain analysis that tracks activities in the crypto world and Paxful, a crypto exchange platform, Kenya is among the nations with the highest crypto trading activities in the world.
Cryptocurrency Adoption Index ranks Kenya 12th for cryptocurrency ownership out of 27 countries surveyed globally.
An estimated 16 per cent of Kenyan adults are internet users while there are 4.8 million cryptocurrency accounts in the country, based on an online survey of 52,883 people across 27 countries.
Bitcoin ownership in Kenya remains above the global average of 39 per cent, with 54.7 per cent of crypto owners saying they hold it.
In March this year, Njoroge said Kenyans should avoid peer-to-peer (P2P) cryptocurrency transactions since it is not regulated.
“There are people who are excited about cryptocurrencies because they see it as a sort of investment that they can win big because prices are going up quickly, so they believe they would see a huge return for their investment,” he said.
‘‘But I think that is why we say for every person who wins something, there are hundreds who lose,” Njoroge added.