Compared to other regions of the world like the United States or Western Europe, sub-Saharan Africa does not have a massive impact on the market for cryptocurrencies traded on a global scale. “ As in previous years, it is the smallest cryptoeconomy of any region in the world, accounting for just 2.3% of overall transactions between July 2022 and June 2023 », We can read in the section dedicated to the continent of the latest report from the specialized research company Chainalysis, published in mid-September. But several African states stand out.
Totally absent in certain countries, cryptocurrencies have become “ an important part of the daily life of many inhabitants » in Nigeria, Kenya, Ghana or South Africa, points out Chainalysis. The first went from 11e at 2e world position in one year (Kenya, Ghana and South Africa are respectively placed at 21ste29e and 31e rank) in terms of adoption of cryptocurrencies, just behind India and ahead of Vietnam, according to the index published annually by Chainalysis, which highlights the number of users and the share of their wealth invested rather than volumes global exchanged.
Proof of this enthusiasm, cryptocurrency transactions in Nigeria have continued to grow despite a slowing global economic context and a gloomy period for cryptocurrencies, notes the research firm. The West African giant is the “ one of the six countries » from the top of the index whose trading volumes have increased (+ 9%).
“Alternative savings solution”
The oil country, with some 220 million inhabitants, displays extremely high rates of inequality and illustrates the difficulties currently facing many African countries: economic crisis, inflation, shortage of dollars and collapse of the local currency. The naira is the least performing of the African currencies monitored by Bloomberg, with, according to the financial agency, a current rate of 992 naira per dollar on the parallel market, or 30% less than its official rate.
According to Chainalysis, Nigerians – like Kenyans, Ghanaians or South Africans – are therefore adopting cryptocurrencies above all out of pragmatism: to try to protect their money. Moreover, notes the research firm, these users mainly choose bitcoin, the most famous of them, far ahead of ether or other “tokens”, “ turning to what we call “digital gold” as an alternative savings solution.” “While people in wealthier regions buy and sell more cryptocurrencies than those in emerging markets, the latter have a greater daily need for cryptocurrencies, very much in line with the original vision of bitcoin and that of the sector in general”argues the study.
In Lagos, the bustling Nigerian economic capital, analyst Michael Famoroti, from the economic intelligence firm Stears, confirms that cryptocurrencies have become “ very popular » in recent years for savings and fund transfers, particularly from the immense diaspora, but they remain very rare in payments. And this despite the restrictions imposed by the Central Bank, which prohibited banks from carrying out transactions in cryptocurrencies.
“Earn money quickly”
“ This had the effect of moving the crypto environment towards a purely person-to-person, wallet-to-wallet, via exchanges, and then people found all kinds of solutions to convert these cryptos on a local or international account », Explains the analyst.
The speculation (trading) is another use which has become all the rage in recent years in this country with a very young, digital population and a glaring lack of employment. “ In 2021, when crypto prices were soaring, people saw it as an opportunity to make money quickly », recalls Michael Famoroti, estimating that “ several hundred thousand Nigerians, perhaps more, then bombarded crypto platforms to make money “.
This frenzy has recently subsided, he emphasizes, notably due to the turbulence experienced by the sector. Prices have fallen – bitcoin has fallen from a record $69,000 in November 2021 to around $26,000 currently – while several exchanges like FTX have gone bankrupt. “ The market is less hot », he believes, even if, in a country where everyone fights to earn their living, he “ still exists, because people began to speculate on this very volatility”.