Sub-Saharan Africa, often considered a smaller player in the global cryptocurrency market, is making significant strides in crypto adoption. Recent data by Chainaalysis reveals that the region accounted for 2.3% of global transaction volume between July 2022 and June 2023. During this period, an estimated $117.1 billion in on-chain value flowed through the region. Moreover, centralized exchanges emerged as the dominant platforms, facilitating over half of all transaction volumes.
However, what sets Sub-Saharan Africa apart is its retail-driven market. A larger share of transaction volume in the region comes from transactions under $60 billion. This suggests that cryptocurrencies are becoming an integral part of the daily lives of many residents, especially in key markets like Nigeria, Kenya, Ghana, and South Africa.
The role of Bitcoin and stablecoins
According to the report, Bitcoin accounts for a regional volume share of 9.3%, outpacing even North America and Eastern Europe. Sub-Saharan residents are increasingly viewing Bitcoin as an alternative store of value, especially in countries grappling with rising inflation and debt. For instance, Ghana saw its inflation rate reach 29.8% in June 2022, its highest level in two decades. Consequently, many Ghanaians have turned to Bitcoin as a means of preserving their savings and achieving financial freedom.
Additionally, there has been a noticeable shift towards stablecoins in the region. According to Moyo Sodipo, Co-Founder and CPO of Nigeria-based cryptocurrency exchange Busha, the decline in Bitcoin’s value has led to a growing interest in stablecoins. Sodipo stated that market shifts are not dampening activity but rather encouraging diversification between Bitcoin and stablecoins.
Regulatory clarity is also shaping the cryptocurrency industry in Sub-Saharan Africa. South Africa has been a regional leader in this regard, with its Financial Sector Conduct Authority announcing a licensing regime for cryptocurrency businesses. This move has not only provided legal clarity but also encouraged billions of dollars worth of digital currency trading in the country.
In Kenya, the government has proposed a bill advocating for a consistent securities definition of digital currencies. Meanwhile, Nigeria has approved a national blockchain policy, highlighting the potential benefits of blockchain adoption for the country. These regulatory steps are likely contributing to the growth of local cryptocurrency exchanges, which have been outpacing their international counterparts in the region since early 2023.
What lies ahead
The future of Sub-Saharan Africa’s crypto economy appears promising. Large countries like Nigeria are already positioning themselves as global leaders in crypto adoption. Increasing regulatory clarity throughout the region is bolstering this growth. Local crypto operators are well-positioned to take advantage of these developments, given the day-to-day need for cryptocurrency in these emerging markets.
In summary, Sub-Saharan Africa is witnessing a surge in cryptocurrency adoption, driven by economic challenges and a need for financial alternatives. Regulatory developments are providing the necessary framework for growth, making the region a key player in the global crypto industry.