top of page

Mobile crypto banking is huge in Africa!





Source: Nill Balek

Content


crypto banking in africa

Glossary

  1. Blockchain: a decentralized, distributed digital ledger that logs transactions across numerous computers and prevents backtracking without also changing all subsequent blocks.

  2. Cryptocurrency: a digital or virtual currency with security provided by cryptography. It uses blockchain technology and is decentralized.

  3. Crypto Assets: Digital assets protected by cryptographic to secure transactions on the blockchain that protects them.

  4. Ripple: a digital payment technology that makes it possible to send money internationally quickly and cheaply. The XRP cryptocurrency is issued by Ripple.

  5. XRP: the Ripple network's native cryptocurrency. It serves as a network bridge currency for transferring value between various fiat currencies and centralised third parties.

  6. CV VC: a Swiss-based venture capital business that makes investments across the whole cryptocurrency and blockchain value chain. It provides growth-stage businesses with seed money, venture capital, and value adjustments.

  7. Standard Bank South Africa: one of the biggest financial services organizations in South Africa. It runs operations in 20 African nations in addition to other significant global markets.

  8. On-Demand Liquidity (ODL): a Ripple solution that eliminates the requirement for pre-funded nostro accounts by sourcing liquidity during cross-border transactions using XRP.

  9. Remittances: the money that an expat transfers via wire, mail, or online transfer to their nation of origin.

  10. Bancarization Rates: the proportion of individuals who can use financial services.

  11. ISO20022: a global standard for financial organizations to exchange electronic data. It establishes a universal model and language for payment data.

  12. MFS Africa: a fintech business that offers an option for sending money to African mobile wallets. In Sub-Saharan Africa, it is linked to more than 200 million mobile wallets.

  13. Blockchain-Based Payment Rails: a blockchain-based infrastructure that makes it easier for parties to transfer assets.

  14. Mobile Banking: A service made available by a bank or other financial institution that enables its clients to carry out financial transactions remotely using a mobile device.

  15. Stablecoins: A stablecoin is a sort of cryptocurrency that is intended to have as little price volatility as possible in relation to a "stable" asset or a basket of assets. A stablecoin may be anchored to another cryptocurrency, fiat money, or commodities that are traded on exchanges.

  16. Agent Network: An agent network in mobile banking refers to the people or organizations that act as banking representatives and enable consumers to do operations including deposits, withdrawals, and bill payments.

  17. Trustless Transactions: transactions that don't need parties to have faith in each other because blockchain technology is protecting them.

  18. Peer-to-Peer (P2P): a type of platform architecture that is not centralized and allows members to communicate directly with one another.




Key points (Mobile Crypto Banking)


The Need for Early Crypto Adoption in Africa: A Mobile-First Approach

  1. Mobile banking experienced a revolution with the arrival of telecoms in Africa, but it hasn't been able to completely close the gap in financial services.

  2. Stablecoins and cryptocurrencies claim to address many of the problems that exist in the mobile banking sector.

  3. From July 2020 to June 2021, the volume of digital assets increased by $105.6 billion in Africa, or 1,200%.

  4. By dramatically reducing remittance fees and offering fundamental savings and lending products, cryptocurrencies could play a positive role in financial services and remittances..

  5. 57 percent of Africans still lack a bank account, despite efforts to raise bancarization rates.

African Blockchain Report 2022: At Least 13 Countries Use Ripple and XRP

  1. At least 13 African nations are using Ripple's XRP cryptocurrency and blockchain services.

  2. Electronic payment income is anticipated to increase by 20% to $40 billion by 2025..

  3. On-Demand Liquidity (ODL), a payment service from Ripple, enables businesses to settle international payments in real-time at a fraction of the cost without causing working money in destination accounts to become immobilized.

  4. With its presence in nations like Benin, Burkina Faso, Ivory Coast, Egypt, Ghana, Kenya, Mali, Niger, Nigeria, Senegal, South Africa, Togo, and Uganda, Ripple is already well-positioned in the continent.

  5. In the first quarter of 2023, Ripple announced a cooperation with MFS Africa to use ODL to build ISO20022 compliant payment services with blockchain-based payment rails.



The Need for Early Crypto Adoption in Africa: A Mobile-First Approach


crypto banking in africa

The emergence of telecommunications around the turn of the millennium brought about a revolution in Africa, particularly in the field of mobile banking, which has had a profound effect on the continent. Africans may now perform a variety of financial transactions using their mobile phones, from paying electricity bills to borrowing money. Nevertheless, despite the advancements made in mobile banking, they have not been sufficient to close the remaining access gap to financial services in Africa. Among other things, the industry needs to manage a complex pricing structure, internationalise mobile money, and scale its agent network.


Stablecoins and cryptocurrencies promise to alleviate many of these underlying problems.

Africa has the chance to take advantage of this technology to achieve the kinds of generational changes required to significantly improve the lives of Africans, as the COVID-19 outbreak transformed interest in cryptocurrency from a niche environment to retail investors. In comparison to other places, Africa may benefit the most from the adoption of this technology.




Despite being in its infancy compared to other regions, cryptocurrency usage is growing exponentially throughout Africa. According to Chainalysis's projection in The 2021 Geography of Cryptocurrency Report, crypto asset volume in Africa increased by an astounding $105.6 billion (1,200%) between July 2020 and June 2021. The world's highest growth was represented by this.


Remittances and banking services are two key industries where bitcoins could have a positive impact. For many families, remittance transfers from and into Africa are a lifeline. Remittance costs are the highest in Africa, though. Because of the blockchain technology that it uses, cryptocurrencies may be able to help with this. It is robust, decentralized, scalable, and permissionless. The technology's peer-to-peer structure promises to do away with middlemen, thereby reducing the costs related to remittance.



crypto banking in africa 3

The majority of Africans lack a formal bank account. Although there has been growth in the continent's bancarization rates, 57% of Africans still lack any kind of bank account. Like traditional banks, crypto banking does not offer sophisticated financial products. However, simple lending and savings solutions are currently on the market. Digital assets are used as collateral for cryptocurrency loans, which typically do not require credit checks. Through crypto platforms, these peer-to-peer transactions are trustless.


In conclusion, despite the fact that Africa may seem to be behind in the cryptocurrency race, the technology is still in its infancy. Africa could create specialized markets in industries like agriculture, remittances, and banking services for the underprivileged and, unbanked with the help of creative leadership, a dedicated private sector, and a strong commitment from everyone to be a participant in change rather than a spectator.



crypto banking african woman


African Blockchain Report 2022: At Least 13 Countries Use Ripple and XRP


At least 13 African nations are using Ripple's blockchain services and its token XRP, according to the "African Blockchain Report 2022" produced by CV VC in partnership with Standard Bank South Africa. Despite the continent experiencing great progress in recent years, there are a lot of unrealized prospects for digital payment service providers like Ripple in Africa. Electronic payment income is anticipated to increase by 20% to $40 billion by 2025.



The financial system of the African continent still has gaps, nevertheless, many African firms and countless individuals lack access to banking services. Many are unbanked or underbanked. Due to the widespread use of mobile phones, crypto is also considered to be a solution.




Less than 10% of all payments in Africa are made digitally at the moment. The report's authors estimate that using blockchain and cryptocurrency-based remittances can reduce fees by an average of 6.3% globally and 8.46% in sub-Saharan Africa.

With its presence in nations like Benin, Burkina Faso, Ivory Coast, Egypt, Ghana, Kenya, Mali, Niger, Nigeria, Senegal, South Africa, Togo, and Uganda, Ripple is already well-positioned in the continent. With the help of Ripple's On-Demand Liquidity (ODL) payment service, companies may settle international payments in real time for a small fraction of the price. By employing the digital asset XRP as a bridge currency, money can be sent and received on either side of a transaction in local currency.


The report also emphasises the partnership between Ripple and MFS Africa, which was declared in the first quarter of 2023. The South African supplier is constructing ISO 20022-compliant payment services with blockchain-based payment rails using the ODL platform.



Conclusion: The Future of Crypto Adoption in Africa

African happy kids

There is no denying that cryptocurrencies have the power to revolutionize Africa. Digital financial services and banking solutions have already been made possible by the mobile revolution, and cryptocurrencies, especially stablecoins, promise to solve the remaining issues. The 1,200% increase in crypto asset volume between July 2020 and June 2021 (And counting!), which is proof of the exponential expansion of crypto adoption in Africa, shows a willingness to adopt this new technology.


The use of cryptocurrencies and bitcoin can considerably lower remittance costs and offer the unbanked population—which still accounts for 57% of Africans—basic banking services. Cryptocurrencies and crypto payment systems have the enormous potential to completely transform sectors like agriculture, remittances, and banking services for the impoverished.


At least 13 African nations already use Ripple's blockchain services and its token, XRP. Organizations can settle international payments in real-time and at a large savings thanks to Ripple's On-Demand Liquidity (ODL) service, which employs XRP as a bridge currency. This service fills a critical demand in the continent.

It's crucial to remember that, despite being efficient, Ripple's approach is still centralized. This begs the question of whether users place more value on transaction speed and efficiency than on the decentralization that is the key value proposition of cryptocurrencies. The current trend implies that the practical advantages of quick, inexpensive transactions may actually exceed the conceptual advantages of decentralisation for many users, especially those in areas with major gaps in financial service provision like Africa.




In the end, how well these technologies can address the particular demands and difficulties of the continent will determine the adoption and success of cryptocurrencies there. The early indications are encouraging, and with more innovation and regulation, cryptocurrencies might have a big impact on the direction of Africa's financial future.


4 views0 comments
Post: Blog2_Post
bottom of page