There has been little advancement in cryptocurrency use in Africa, underrating the major possibilities of its use on the continent. According to recent research, Africa’s active crypto countries are South Africa and Nigeria. The rest of the continent has not unlocked the power of blockchain in currencies.
The report on the state of cryptocurrency in Africa, suggests that the continent is still lagging despite being a great candidate for cryptocurrencies.
“Although it is a diverse region, African nations share some key similarities and trends. Economic problems, from high inflation rates and volatile currencies to financial issues such as capital controls and a lack of banking infrastructure, create a fertile ground for an alternative to germinate,” the report said.
Despite the low use, the power of cryptocurrency can extend not only to commerce but to giving and grants in various sectors including supporting education in Africa. Due to its decentralized nature, cryptocurrency can bypass the funding challenges that plague most educational and social initiatives at large.
The power of blockchain technologies ultimately means that products such as cryptocurrencies are not subjected to tax and exchange rates that could eat up donations. This makes is a good candidate for consideration when running crowdfunding and organized funding initiatives.
Donations through cryptocurrencies have also been tipped to fester well in Africa due to the adoption of mobile money. Being a digital “currency”, mobile money has already trained millions to use virtual currencies to do good.
However, the regulation of the unregulated crypto world has been a point of friction for many countries in Africa and around the world. The rise in fraud in cryptocurrency sales has forced numerous countries to ban the use of these products to protect their citizens. This has seen the slow down of cryptocurrency use in most markets.
For countries where the law is silent about crypto use, the governments have adopted a wait and see attitude, only allowing innovators to experiment. Going forward, this has to change as the medium can be monitored and projects giving extra oversight by authorities.
In the face of these challenges, some projects around the world have taken up cryptocurrencies to advance global donations to educational projects.
Binance Charity is currently running and education and feeding program in Uganda backed by cryptocurrency. The organization then open crypto wallets for children who are deserving of the feeding program.
“We will open crypto wallets for each child, with each crypto wallet being under the custody of their parents. They will then send the received BNB, BTC, and ETH to suppliers’ wallets to exchange for their children’s food. Everything will be on the chain and verifiable for everyone,” the organization said.
It added that the advantage of using blockchain-backed technology in donations is that the funds can be well traced. “Blockchain technology serves as a critical tool to guarantee transparency, accountability, and efficiency of all transactions. Blockchain also eliminates potential fraud and corruption in the process of sending funds to the end recipients,” it added.
Binance CEO CEO Changpeng Zhao reiterated the potential Africa holds as a cryptocurrency market, despite the low uptake.
He said: “Africa illustrates one of the largest demands and instrumental use cases for cryptocurrency, notably for financial access. According to the World Bank, approximately 66 per cent of Sub-Saharan Africans are listed as unbanked. So instead of trying to bank the unbanked, let’s try and Bitcoin the un-Bitcoined.”
Their success in Uganda has led to its expansion into South Africa to help the education system there. Earlier this year the company announced a USD 1 million donation to support the education of blockchain in the country, something that would propel cryptocurrency use.
In 2018 another cryptocurrency organization announced its project to support education in Africa through the use of blockchain currency. KryptoPal, the digital answer to PayPal, helped Swiss NGO Help2Kids to donate towards the education of children in Malawi and Tanzania.
“We’re very excited about this year-long pilot program that we will be conducting with help2kids because not only will it enable people across the world to donate and improve the lives of children in Africa, but by also using cryptocurrency the flow of the financial transactions is transparent until the actual usage of the funds on-site in Africa,” said Venkat Nallapati, Founder and CEO of KryptoPal.
Overcoming expensive crossborder payments
Diaspora remittance to Africa is a key cog in the economic development of the region. It is estimated that there are 25 million Africans in the Diaspora and between them, they sent over USD 48 billion in 2019.
A good chunk of the remittance goes to education in Africa. For example, each year Kenyans remit USD 288 million towards education; this has helped hundreds of Kenyan families to combat spiraling educational fees and other challenges according to money transfer company, XpressMoney. However, the expensive remittance charges have led many to contemplate remittance by cryptocurrency.
“Cryptocurrencies also offer the ability for lower-cost and faster remittance payments than is currently available. Remittances below $200 to Sub-Saharan countries, cost an average of about 9% compared to the global average of 6.8%, while payments between countries are even more expensive,” the report on State of Cryptocurrency in Africa said.
“Cryptocurrencies are a possible solution to these problems, especially the solutions that prioritize lower fee payments,” it added.
Overall, the support to donate to education in Africa will benefit from the lack of lower fees by using this alternative method of remittance. High remittance fees slowly erode the funds that could go to educate one more child.
Crypto donations
With all the advantages, cryptocurrency donations could be a preferable way to give to social programs including education in Africa.
Develop Africa is also accepting virtual currency to help in its various programs throughout Africa. During this COVID-19 pandemic, crypto donations are being channeled to purchase face masks for students and the installation of handwashing stations to curb the spread of the disease.
For organizations, it will take a change in attitude to adopt cryptocurrency to fund various aspects of social development. Working with third party blockchain and cryptocurrency experts is a recommended path to adopting these new technologies, avoiding the learning curve, and the funds to set up wallets to accept cryptocurrencies.
With blockchain being a fundamental building block for these currencies, the transparency of how donations are distributed becomes second nature to crypto-based donations, making it preferable than the FIAT currencies. In the long run, this new technology might have a greater impact in giving towards social good.
