Pick n Pay has given crypto payments the green light, while the SARB Prudential Authority has paved the way for crypto assets to be regulated. Africa is one of the fastest growing cryptocurrency consuming continents, with adoption growth of over 1,200% in a single year. All of this has implications worth noting, he says. Simon Swanepoel.
The South African Reserve Bank Prudential Authority (SARB) has announced that our banks will now be able to work with cryptocurrency exchanges in South Africa. The SARB will regulate cryptocurrencies by declaring crypto assets as financial products. The regulation includes developing a regulatory and compliance framework for exchange controls and tax laws and ensuring that consumers who buy crypto assets receive a “health warning.” With this warning, they know that the purchase of crypto assets could make them lose money and that it is not the same as a deposit with a bank guarantee.
In light of the announcement, retail giant Pick n Pay heeded the green light and made cryptocurrency payments available to its customers. Shoppers can buy groceries with digital tokens like bitcoin at 39 of its supermarkets in South Africa.
The African Blockchain Report 2021 has listed Africa as an international driver for blockchain technology, specifically in the fintech sector. The fintech sector, using blockchain technology, can create doors for previously excluded citizens to participate in the digital economy by improving access to financial services.
Blockchain technology is rapidly improving the security, accessibility, and reach of financial services to a broader market. This access can generate wealth, transforming millions of lives for the good of generations to come. Africa is adding its mix of tasty tech talent as early adopters embrace and use blockchain technology on the continent.
The African Blockchain Report shows that between July 2020 and June 2021, cryptocurrency adoption in Africa grew by more than 1,200%. This upward trend makes Africa one of the fastest growing cryptocurrency consuming continents, causing a leap from traditional banking systems and embracing new age decentralized digital alternatives.
These payment alternatives overcome considerable obstacles such as sharing information, proving identity (500 million Africans do not have a legal form of identity), and paying for goods and services that were previously out of reach.
In Africa, one of the most prominent pain points solved with cryptocurrencies is that of remittance payments. Many people are forced to find work far from their families and do not have a cost-effective and near-instant way to send money home. With blockchain-powered applications like Mazzuma, Bitsika, and Xago having developed peer-to-peer payment solutions, users make immediate remittance payments in a fraction of the time, with lower fees and fewer restrictions.
According to Standard Bank’s Ian Putter, remittance technology has greater potential to facilitate intra-African trade.
The need to access financial infrastructure and the ability to easily transact with various service providers has accelerated Africa’s growth trend in crypto adoption and blockchain technology implementation. The changing socio-economic and political landscape of Africa is catalyzing this growth as an entrepreneurial spirit, and the need to overcome everyday challenges stimulates the development of products supported by blockchain and crypto technology.
Although it lags behind our counterparts abroad in user volume and start-ups, the hunger in Africa for positive change using technology is evident. The Africa Blockchain Report shares great insights on VC funding in tech startups, with Africa growing by leaps and bounds.
Total global business financing investments in 2021 equals $621 billion. This figure translates into an increase of 111% over the previous year. The total number of deals concluded grew by 31% in 2021 to 34,647. Of these deals, $25.2 billion was invested in 1,247 blockchain deals, a staggering 713% increase over the previous year.
The global forerunner in total blockchain investments is the US, which secures 56% of total blockchain VC funding. By comparison, Africa secured between $4.3bn and $5bn of total global VC investments in 2021. Small as it may seem, this is an impressive 239% increase in funding over the previous year. Additionally, the number of secured deals in Africa grew by 117% compared to the global average of 31%. Finally, 60% of investments in Africa went to fintech businesses, three times the world average.
The most glaring and reassuring statistic in the report is that in 2019 it took 11 months for investment in Africa to reach $1 billion. In 2020 it took eight months and in 2021 it took just seven days.
This stark distinction paints a defining picture of the future trajectory of investments in African tech startups.
The report’s pioneering African nations include three of the ‘big four’: Nigeria, Kenya and South Africa, with Seychelles completing the list. Collectively, these nations secured 96% of the funds for blockchain investments in Africa. Although this represents only a 0.5% share of the value of global blockchain investment, it is 11 times the growth of overall business funding. [Q1 2021 to Q1 2022].
In our country, we actively participate in this growing digital economy, including the development of blockchain. South Africa has legalized cryptocurrencies and has set a standard for embracing these new age technologies. We also have an emerging blockchain community that is particularly active in the Western Cape, where the provincial government is exploring the opportunity for blockchain technologies to reduce delays in service delivery and help with digital identity verification, such as in license centers. and the deed office.
Internet, the missing link
Africa seems to have generated a perfect storm for blockchain and cryptocurrency innovations and investments. The beer includes:
- a massive population,
- high mobile phone penetration [495 million, in sub-Sahara Africa alone, 2020],
- lack of infrastructure that requires the drive to solve real-world problems, and
- fast adoption rates.
Everything is evident, and the numbers speak for themselves of the tremendous opportunity that generates the enthusiasm of the masses.
In addition to needs like the use of autonomous identities (SSI) for citizens to prove who they are and open bank accounts, we face other apparent challenges.
It is conclusive that the need, the will and the talent to build and innovate new age technologies are overflowing. However, fundamental fundamental issues need attention to ensure that a sufficient number of users can safely adopt blockchain-based businesses. Internet infrastructure and connectivity are essential to unlocking blockchain and crypto opportunities for millions more.
According to the report, Internet penetration in Africa is 43%, and broadband is a dismal 1%. Although submarine fiber cables are installed and operational along the coasts of Africa, the terrestrial FTTH infrastructure is poor.
Maximizing the blockchain opportunity requires leveraging population groups that currently do not have access to fiber internet as a priority. By providing this access, the continent can cement its part in the rapid development and growth of this incredible new world.
*Swanepoel is CEO of RocketNet. News24 encourages freedom of expression and the expression of diverse points of view. Therefore, the opinions of the columnists published in News24 are their own and do not necessarily represent the views of News24.
