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How to Leverage FinTech Opportunities in Africa

Over 50 financial and blockchain professionals gathered at “Financial Inclusion and FinTech Adoption in Emerging Markets” for the latest fintech development of Africa held in Eaton Club, Central.

The event commenced with the sharing of Elliott Hoffman, Growth Specialist of Paxful on the adoption of M-Pesa in Kenya and Paxful’s educational efforts to students in Africa. This is followed by the opening keynote of Madoda Ntshinga of the South African Consulate-General in Hong Kong. Madoda mentioned that unbanked people account for around 60% of total African population, which has enormous potential in mobile money adoption. He pointed out that South Africa, Kenya and Nigeria are the 3 countries driving fintech adoption in Africa.

Ray Youssef, CEO of Paxful explained how Paxful reached the African market with challenges involved. While Africa is Paxful’s largest market which account for 45% of the customer base, strict control of monetary system by the governor and education to the Africans are some of the key challenges driving BTC adoption. For example, the monetary system of countries like Ivory Coast and Burkina Faso are under strict control by France. The educational effort for Africans is challenging too as people initially believed Bitcoin and Bitcoin mining are full of scams. To overcome the educational challenges, Paxful set up campus tour in 2019 and explained the benefits of peer-to-peer finance to the Africans.

7 Use cases highlighted by Ray

Ray also highlighted that wealth preservation is one of the most important use cases especially in high inflationary African countries.

Ray’s keynote is followed by the panel discussion “Financial Inclusion and New Technologies in Africa”.

Moderator and panelist (From left to right): Musheer Ahmed of FinTech Association of Hong Kong, Duke Malan of Africa Works Ventures, Ray Youssef of Paxful, Karena Belin of Whub, Rajkumar Kanagasingam of Fintech Association of Sri Lanka

Moderator: Musheer Ahmed, General Manager of FinTech Association of Hong Kong

Panelists:

1) Duke Malan, Partner of Africa Works Ventures

2) Ray Youssef, CEO of Paxful

3) Karena Belin, CEO & Co-Founder of WHub

4) Rajkumar Kanagasingam, President of Fintech Association of Sri Lanka

In relation to tech adoption rate, Karena pointed out that China has a high rate of 60% while South Africa is only 16%. This presents huge room for growth across African countries. Duke believed that technological inclusion takes time due to structural problem, which tech literacy can be improved by hosting coding camps.

In terms of challenges in financial inclusion, Ray pointed out that there are around 40-50 mn unbanked population in the U.S., which some of them prefer using gift cards instead of bank accounts for payments. He also mentioned that localized process is needed to facilitate financial inclusion for each country. For example, eKYC would not work for Kenya as most Kenyans do not have address proof.

In terms of opportunities in Africa, Duke believed that education, credit rating infrastructure and agriculture markets have huge growth potential going forward. Ray highlighted that Africa presents huge arbitrage opportunities with huge presence of asymmetric information across countries. Karena believed asset tokenization in artwork and payment presents huge fintech opportunities in Africa.

The panel discussion is followed by the keynote by Douglas Arner, Kerry Holdings Professor in Law at University of Hong Kong. Douglas first shared with us some insightful stats in Africa: while 75% of Africans have sim card, only 45% of total pay mobile subscription. The smartphone penetration in Africa is about 35% and it is estimated that there will be 300 mn mobile ownership growth by 2025. In telecom market, the revenue stream is switching from mobile subscription to data and apps.

Douglas then highlighted 17 use cases for financial inclusion. Talking about insurance, he pointed out that modelling risk and climate change risk are the key risks for reinsurers.

The event ended with engaging networking sessions and fine South African wines. More importantly, we have conducted an exclusive interview with Ray Youssef, CEO of Paxful on his personal story and latest development of Paxful.

The full interview is coming up soon, stay tuned!

Bitcoin and Other Cryptocurrency Trading Now Declared Illegal in Burundi

Burundi, a country in the Middle Eastern part of Africa has joined the list of African countries that have banned Bitcoin, cryptocurrencies and any form of digital trading.

In a report by Bloomberg, it stated that Burundi had banned Bitcoin and every other form of digital trading from its soil because it can no longer offer protection to persons with problems related to it. This was said to have happened when some Burundian lbs had lost some funds as they traded some digital currencies and ask the government to come to the rescue.

A director at the central bank’s micro-finance department, Alfred Nyobewumusi had said that digital currencies such as Bitcoin and Ethereum are now illegal in the country. He said:

“Strong measures could be taken against all those who will not respect this decision,”

This statement was made in an interview in Bujumbura, the economic capital of Burundi.

What some other parts of the world think

Meanwhile, Bank of England Governor Mark Carney had made a proposal last month to put in place a digital currency that would be at the heart of the global monetary system which would be overseen by public authorities.

Bitcoin, which happens to be the most-traded virtual currency, has risen by 186% this year amidst its massive price fluctuations. Cryptocurrencies have also been seen to have been criticized by the central authorities of some countries in recent times including that of the United States of America; notwithstanding the digital currency seems to thrive eve as some countries opt for the implementation of the underlying technology in various sectors of their economy, trading at about $10,520.94 as September 4, according to data compiled by Bloomberg.

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United Africa Blockchain Association Cries Foul of FNB’s Crypto Termination

The United Africa Blockchain Association (UABA) has lamented the decision by First National Bank (FNB) to terminate its banking services to crypto exchanges, as well as intermediaries trading in cryptocurrencies.

The bank stated: “Following a comprehensive review of the potential risks currently associated with these entities, particularly given that appropriate regulatory frameworks are not yet in place. […] The decision to terminate our banking services to these entities does not apply to individual customers. Due to the confidential nature of our customer relationships, FNB cannot provide any information on specific bank accounts.”

UABA has stipulated that even though South Africa does not presently seem to have any regulations about cryptocurrency ownership, the Crypto Assets Regulatory Working Group availed a Consultation Paper in January that made regulatory proposals in this area.

UABA affirmed: “Registration process for crypto asset service providers was expected to be implemented by the first quarter of 2019. This, to our best of knowledge, is yet to take place. Then it would be followed by a review of existing regulatory frameworks followed by new regulatory requirements or amendments to existing regulations. Thus far, there hasn’t been taken.”

UABA also added: “There is currently no FinTech regulation for crypto assets, nor are crypto-assets prohibited. Most of the financial sector legislation which applies to financial products and financial services pre-dates crypto assets and other digital assets, and it is therefore not surprising that none of the financial sector laws dealing with the issue and sale of financial products apply (at least not expressly) to crypto-assets.”

UABA’s concerns are pegged to the fact that FNB’s crypto termination could jeopardize cryptocurrency adoption in South Africa.

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Blockchain Adoption Wins Center Stage in Africa

Blockchain technology is continuously reigning supreme across the globe based on the distributed ledger network it avails, making transparency, immutability, and traceability inevitable.

Africa has not been left behind in this picture because blockchain-based initiatives are continually being launched. The continent, however, seems to be chiefly focused on blockchain adoptionas compared to incorporating regulatory measures into this field.

Africa’s heightened activity and ongoing projects in the blockchain space have expanded people’s knowledge base.

The CEO and founder of Blockchain Capital, Irlon Terblanche, said: “The blockchain is just a distributed database system. It is only one component of a cryptocurrency. And there is no regulation stopping anyone from using a distributed database or distributed ledger as it is more commonly called.”

He added: “For me, the most important assessment that trumps everything else is that the bulk of people, even so-called ‘experts’ do not truly understand Bitcoin, cryptocurrency and blockchain technology. And as a result, you have all kinds of disparate initiatives from different companies, using different platforms, trying to win market share in the lucrative remittance space.”

Terblanche asserted that people in the African continent should be continuously taught about blockchain technology as it is not only confined to cryptocurrencies. He believes this approach will be instrumental in instigating optimal adoption.

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Combating Deforestation with Blockchain in Africa: Everything You Need to Know

The Most Influential People of African Descent (MIPAD) – an African startup tried to address the deforestation crisis in Africa. Through its social impact initiative, the startup intends to assign and plant over 200 million trees across Africa by 2024.

MIPAD’s Ambitious Plans

MIPAD’s CEO and Founder, Kamil Olufowobi, had a conversation with CNN. He revealed that the organization is connecting local communities impacted by deforestation or pollution with global citizens who are looking forward to planting their roots in Africa.

Under this initiative, anybody to place a request to have a tree planted, named or gifted in honor of themselves or anybody they love.

Olufowobi said that this initiative creates an opportunity where the diaspora wins, Africa wins, and all of humanity wins. He identified that this initiative works to support the diaspora to minimize their barrier of entry to Africa.

The program intends to drive support for the Great Green Wall (an African-led movement with great plans to grow over 8,000 km of natural habitat across entire Africa). The program also aims to promote climate action as one of the United Nations’ Sustainable Development Goals.

Taking Care of Environment Is A Collective Responsibility

Olufowobi mentioned that each new tree planted will be named after the person who planted it or in honor of a person they love.

He revealed that several diasporas want to connect to Africa. Therefore, this program now brings a deeply emotional and sentimental connection to diasporas having roots in Africa and those living in the continent.

However, Olufowobi said that Africa is a collective responsibility for all. The initiative is not restricted to African descents but is open to all humanity to support the continent and have their roots planted on African soil.

Blockchain Use Cases

To personalize the service, MIPAD works together with Decagon Institute to deploy artificial intelligence and data science to geo-tag and identify trees planted using blockchain technology.

The use of blockchain is important as it enables MIPAD’s subscribers to know the exact location of their allocated trees and be in a position to see them using satellite imagery like Google Maps.

The Ambitious Plan to Plant Trees Remotely

Olufowobi identified that MIPAD is already working with forestry departments and city parks in all major cities in Africa to help people plant their trees remotely. He revealed that the organization functions by getting the order placed while forestry departments and city parks are the ones who do the implementation.

He said MIPAD are the owners of the trees, and the organization acts as the voice of Africa to the diaspora, saying, “You can support Africa and you, in return, can have your root planted.”

The organization is banking on its history of connecting Africans to encourage them to get involved in the project.

MIPAD has recognized African descents in the diaspora from all regions of the world and, so far, has honored about 500 people in more than 60 countries. This is line with the UN’s Declaration of The International Decade for People of African Descent.

Many African nations are also planting trees. For example, Ethiopia planted 350 million trees in a single day in July 2019. This set a new world record as Ethiopia joined over 20 other African countries in their pledge toward restoring 100 million hectares of land, based on their commitment to the African Forest Landscape Restorative Initiative.

In December 2019, Nigeria also announced that it would plant a further 25 million trees as part of its commitment to the Great Green Wall.

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Cryptocurrency Giving People in Africa the Power Against Rising Inflation

Andy Cheung, OKEx’s Head of Operations, had recently revealed that cryptocurrency provides several people in Africa with an opportunity to control their purchasing power against rising inflation.

He said that the OKEx’s Africa Cryptotour’s mission is to promote blockchain across the world. So far, the cryptocurrency exchange has visited five cities across four countries in Africa and met thousands of people on their tour.

Based on talks and interactions with Africans, Andy sees true the transformative power of blockchain in the continent.

The rise of Cryptocurrency in Africa

Africa is currently facing economic turmoil. The value of its local currencies is on a decline against the US Dollar in nations like Ghana, South Africa, and Nigeria. This has led to increased use of cryptocurrencies in the continent.

In Africa, Tunisia became the first nation to “go blockchain” in 2015 after it decided to provide its national currency for money transmittance through cryptographic technology. Senegal became the second by issuing blockchain-based ECFA in 2016.

BitcoinAfrica’s report indicatedthat the Paxful crypto exchange had experienced tremendous growth with more than three million subscribers majorly from the African nations. Its subscriber base is rising at a rapid pace. Together with the United States, nations like Ghana, Nigeria made more than 15 million trades in 2018, which is 65% year-on-year growth.

Crypto not bound by geography

Cryptocurrency is internet-based, and therefore not restricted to a particular geographical location. Interest in cryptocurrency has been increasingsteadily in Africa. Some economists recognize it as a disruptive innovation, which is blossoming in the continent. Bitcoin is a major cryptocurrency leading the pack in the continent.

Meanwhile, cryptocurrency is different from Mastercard or Visa as it doesn’t need intermediaries and not regulated by governments. Crypto transactions rely on the internet, which means they can occur anywhere in the world.

Although Africa is rarely recognized among the largest market for cryptocurrency, it sets to steal a march over other markets.

A hedge against inflation

Africa still has the highest inflationin the world. Many African countries like Zimbabwe, South Sudan, Liberia, Sudan, Sierra Leone, and Angola are battling high inflation. For example, annual inflation in Zimbabwe hits highs of 175.66%. This is the highest inflation rate record since 2009, when the nation was forced to abandon its currency.

Other nations with double-digit inflation rates include Nigeria, Ghana, Egypt, Malawi, Zambia, and Mozambique. It’s, therefore, not surprising to see that some of these nations are among the leading Bitcoin economies in Africa. The main Bitcoin nations are Zimbabwe, Nigeria, Kenya, Ghana, Botswana, South Africa, and Uganda.

African central banks have consistently adopted policies, which have eroded the buying power of their citizens’ money. Bitcoin may provide Africans an option for money as a store of value.

Africa’s economic stability is worrisome for many. But cryptocurrency remains unaffected by the African economy’s inconsistencies and therefore offers a more stable option for several citizens across the continent.

Cryptocurrency’s benefits are widely evident, and this explains why its popularity continues to rise in Africa.

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7 Steps in Luno: How to Convert Your USD to Nigerian Naira Using Bitcoin

In recent times cryptocurrencies have been gaining a lot more recognition than in the past, it is almost accurate to say that the speed at which they have been gaining recognition is almost exponential. Bitcoin has the largest market dominance has seen a steady increase from the end of 2019 to date.

Africa happens to be one of the regions in the world that have been responsible for this sudden surge. With Nigeria being at the forefront of this race, Google trend had indicatedan increase in the Google search for Bitcoin for the last few months. Considering the fact that the country has been experiencing some relatively troublesome economic situations, it is not uncorrelated with the efforts its citizens have been making which is a clear pointer that they are now seeing this digital currency as a more stable alternative.

According to the latest World Bank report, in 2019, 9.3% of the value to be transferred is charged as the cost of sending funds to sub-Saharan Africa via regular Remittance services — with Nigeria being the highest user — This is said to be the highest remittance rate anywhere around the world.

Besides the relatively unstable economy, the number of Nigerians in diaspora have been on the increase and seeing that cryptocurrencies are a better alternative to remittance services offered by local financial operators, migrants in need of sending funds to their friends and loved ones are gradually resorting to the use of Bitcoin to escape the exorbitant charges by the banks and other financial operators.

This newly found interest also explains the recent increase in the number of exchange platforms that have been springing up to meet this growing demand for liquidity within this space. Some platforms where Nigerians can receive funds in dollars or Bitcoin and convert to Naira has been seen as a way out of the too many constraints fiat presents, they include Luno, LocalBitcoins, Paxful, Bitpesa, to mention but a few.

In this article, we would be explaining in detail the steps to take in opening an account as well as the process of conversion of USD/BTC to Naira. We would be using Luno which happens to be one of the country’s oldest and trusted exchange platforms.

Luno (formerly known as BitX) offers a 0% fee for users who make liquidity by placing an order while market takers are meant to pay a fee between 0% to 1% for the Nigerian Naira. Bank transfers and credit card deposits can also be made on the platform easily, while bank transfers are free, credit card deposits will incur a fee.

The ease of use, low fees, and high transaction limits are some of the major features that endear it to many Nigerians, thereby giving it a very positive reputation. Besides the BTC/NGN trading pair, Luno also has other Bitcoin trading pairs which include:

BTC/EUR

BTC/ZAR

BTC/MYR

BTC/IDR

Below are the steps to receive and convert your US Dollars or BTC to Nigerian Naira:

Step 1: Visit the Luno website to create an account.

Step 2: Sign up to create an account and sign in using your registered email and password.

Step 3: Select the purpose of opening the account. Note that this is what Luno will use to determine what kind of account a user intends to open.

In this case for “receiving funds into the country”.

Step 4: Now to receive Bitcoin go to the Homepage and click on the BTC option.

Step 5: Click on the receive icon to reveal the wallet address and a bar code to receive BTC.

Step 6: Name your wallet and scan the barcode or copy the wallet address and paste as a message to the sender.

Step 7: Select BTC as the currency you would like to sell and input the amount.

Finally, click on “Next”, now when you get your Naira, link your account to the Luno platform and transfer to your account. It would take a little while for the balance to reflect but after you do that all you have to do is wait for your account to be credited.

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Google Web Searches for Bitcoin Hit a Historic Low with Nigeria Still Leading

Regardless of the fact that there have been a lot of concerns lately about the recent outbreak of the Coronavirus and its possible negative impact on the cryptocurrency market, the price of Bitcoin continues to break new resistance levels, soaring above the $9000 mark over the last few days.

The Global web search data from Google Trends indicate that there has been a decline in searches for Bitcoin in recent times, as it has recorded an all-time low since October 2018. Even in the midst of the activities going on in the global scene we see that some African countries have maintained the lead in these searches with Nigeria is recorded as the country with the highest level of Bitcoin google searches, followed by South Africa and Ghana respectively. Although the results from Google trends are often seen as irrelevant data metrics by some people, it serves a very strong indication which is very important to the growth of the industry.

Image from Google Trends

Google Trends also revealed that “Binance exchange” is the most popular Bitcoin-related search query followed by IOTA, TRON, and Luno.

The top ten countries by global Bitcoin web searches include; Nigeria, South Africa, Ghana, Austria, The Netherlands, St. Helena, Slovenia, Singapore, Switzerland and Australia with a score of 100, 90, 76, 68, 66, 66, 66, 63, 60, and 59 respectively at the time of writing this report.

However, the major leaders in the industry, i.e., Canada, United States, Malaysia, Germany, and the United Arab Emirates, hold the 11th, 12th, 13th, 14th, and 15th positions, respectively. Statistics from China are left out in this data metrics as Google has no access to that region.

Meanwhile, the United States of America is one of the leaders in the cryptocurrency and blockchain industry but has recorded an even lower position on Google Trends than the results generated for previously stated countries.

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Why is Nigeria Africa’s Biggest Crypto Hotspot Even Though it Doesn't Even Have a Bitcoin ATM?

Nigeria is the biggest crypto market in Africa, but based on official records it does not have a functional Bitcoin ATM. WeeTracker reported that this trend is noted in Nigeria despite it backing the first stablecoin project in the continent using its currency the Naira. Other African nations, such as Kenya, Uganda, South Africa, and Djibouti are proud owners of a Bitcoin ATM.

The growth of Bitcoin ATMs globally

In 2014, Canada became the first country to have a Bitcoin ATM globally. A year later, the United States followed suit based on its first installation at a cigar bar located in New Mexico.

This trend has been growing worldwide because at least 4,000 Bitcoin ATMs have been installed. Africa has, therefore, not been left out in getting a share of the cake.

Bitcoin ATMs taking shape in Africa

According to Coin ATM Radar, South Africa is home to 5 Bitcoin ATMs, whereas Ghana has two. On the other hand, Kenya got its first installation in 2019.

Despite this notable trend in other African nations, Nigeria seems not to be hitting the ground running in embracing Bitcoin ATMs in spite of it being among the top three crypto markets in Africa the others being South Africa and Ghana.

The co-founder and COO of Paxful, a peer-to-peer Bitcoin marketplace headquartered in New York, Artur Schaback, acknowledged that Nigeria is one of the company’s biggest crypto markets, but he was surprised that the nation does not have a Bitcoin ATM.

He, however, noted, “I think it boils down to three factors: investment, maintenance, and security. A good Bitcoin ATM machine requires upfront investment and additional shipping cost and customs charges. Top that with maintenance fees for putting cash, maintaining secure servers and evading petty robbery attempts, establishing a bitcoin ATM is not easy anywhere in the world, even in Nigeria.”

Schaback was of the idea that when it comes to owning a Bitcoin ATM, a sole proprietorship is a bit tricky. Nevertheless, some of the installed ATMs are maintained and operated by companies and societies with the absence of governments.

For instance, in Kenya, the country’s first Bitcoin ATM is run by the BitClub Network, a pool of cryptocurrency enthusiasts. Conversely, in Uganda, it is located at the Kampala Post Office and operated by a local blockchain company called KIPYA Bit2Big.

By 2023, the worldwide Bitcoin ATM market is speculated to get to $145M USD. The trend noted in Nigeria is that crypto assets are a considerable entity in its economy, but Bitcoin ATMs have not yet been embraced.

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Multi-Grammy Winning Singer Akon Planned to Launch Akoin on Stella Network

Widely regarded as a successful music artist, Akon has revealed the whitepaper about his forthcoming cryptocurrency project known as ‘Akoin.’ The document entails the project as a cryptocurrency, “designed for entrepreneurs in the rising economies of Africa and beyond,” The project’s mission is to “unlock the potential of the world’s largest growing workforce” through the use of blockchain technology. Primarily, Akoins will be used as utility tokens that encourage ‘atomic swaps’ between cryptocurrencies, fiat currencies, and credits for mobile phones on the Akoin network. Akon reiterated that the mobile credits are already in use as a currency in Africa. 

“We have so many currencies in Africa – a lot of them are unstable, and most of them are untrusted. It got to the point where the day-to-day African people don’t even use the currencies anymore, they’re using their cell phone minutes and credits as a way of trading for basic goods like produce, fish, fruits and things on the market. Ultimately, outside of the villages, you really can’t trade cell phone minutes for anything,” Akon continued. “So we want to utilize that same mindset to take advantage of that mechanism outside of Africa – so even when they leave the continent, they can be able to utilize all of their credits and be able to purchase real things.”

Furthermore, the token will also be employed to pay for fees in listing applications, transaction fees, advertising fees on the platform, and a means of exchange throughout the network. The launch of the token will take place on the Stellar (XLM) network, which will be held in both Stellar and Akoin Wallets. The whitepaper also revealed that private transactions occurring on the Akoin system would be subject to a 2.5% charge. 

In addition to this project, Akon is also looking to develop his ‘Akoincity’ plan in Senegal. The expected completion date is in five to ten years. Mostly, the rapper hopes that these endeavors will push forward the African economy. 

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