Despite the prevailing market conditions, cryptocurrency adoption, primarily across emerging economies, continues to grow unabated. This reality, in turn, is driving investor interest in these potential markets.
For instance, the African blockchain landscape is currently attracting significant funding from prominent venture capital firms as well as angel investors. Recently, the Central African Republic (CAR), following the footsteps of another emerging economy El Salvador, approved the use of bitcoin (BTC) as a legal tender, further increasing investor confidence.
According to the latest report by Nation, African blockchain companies raised roughly $304 million during the first and second quarters of 2022, which is almost three times higher than the total $127 million collected by startups in the region during all of 2021. The report further clarified that in the first three months of 2022, venture capital funds invested $91 million into several African crypto startups. In the second quarter, the inflow grew by a staggering 134% to reach $213 million. This came at a time when the broader crypto market was stumbling due to the Terra implosion, rising inflation, and ongoing geopolitical challenges.
Seychelles-based crypto exchange KuCoin raised $150 million, which has since been dubbed the “mega deal” for the African blockchain market. Pan-African crypto exchange Mara and Nigerian crypto startup raised $23 million and $10 million each, while Congo-based Jambo raised $30 million and South African exchange VALR raised $50 million.
Emerging Economies Love Bitcoin
Back in the fourth quarter of 2021, when the crypto market was touching fresh highs, several crypto-centric awareness and educational campaigns were launched across the African continent, the fruits of which are becoming increasingly evident over the past few months.
For instance, a group of distributed ledger technology (DLT) experts based out of East and West Africa under the umbrella of Jelurida Africa launched the first-ever East Africa Blockchain Expedition to educate locals on the benefits and advancements in blockchain and crypto last year. Other organizations like Emurgo Africa, the Cardano Foundation’s commercial wing, have also actively invested in a range of awareness and educational programs to accelerate the widespread adoption of blockchain technology and cryptocurrency.
Thanks to these efforts, several mainstream businesses around the region have started integrating blockchain technology into their existing models, further contributing to the growing adoption. Nigerian digital payments company Interswitch and Senegal’s fintech firm Wave are among the tech unicorns to embrace the nascent technology. Another notable Pan-African incubator project, Adrian Labs, has also entered the scene to support the region’s startups and entrepreneurs using blockchain, AI, and other emerging technologies.
In addition to venture capital interest, an increasing number of Africans are adopting cryptocurrency as their go-to source for payments, transfers, and even savings. Overall, multiple African countries are experiencing a surge in crypto adoption as residents continue to battle regional challenges like inflation and devaluation of their local currencies.
Another reason behind the increased adoption is the growing number of tech-savvy young adults across the African region, paired with the increased use of smartphones and the internet. In its latest report, Finbold reported that Nigeria now ranks as the world’s most crypto-obsessed country, with a Google trends search score of 371.
Recently, cryptocurrency exchange AAX commissioned a survey in conjunction with Forrester Consulting to assess cryptocurrency adoption across Africa, Latin America, Southeast Asia, and the Middle East. Per the reports, the awareness and adoption of cryptocurrency, primarily bitcoin (BTC), is at an all-time high in these regions, with Africa leading the chart.
Forrester Consulting’s survey highlights that the majority of the African respondents have indicated that they use BTC as the preferred method to transfer funds domestically and internationally. Nearly 46% of respondents noted that they use BTC to make payments and transfers, while 56% said that they use it to preserve long-term value, and 52% said that they use it as an investment tool.
On the future of blockchain and crypto in Africa, Jelurida Africa’s Managing Director, Mr. Adebajo, explains, “Most African governments are more interested in building local capacity. So, if the plan is to gain the attention of the Government, more efforts are to be placed on training developers from within Africa. Although experience also matters a lot when deploying sophisticated solutions, this is where foreign developers would come in handy. When such a need arises, we will be willing to work with foreign entities to realize the goals of the projects.”
“We have spent the last couple of months building prototype solutions across diverse fields. While we continue to engage the government and hold meetings and meetups, we also plan to hold a Pan African Hackathon in collaboration with some other big players in the space,” stresses Adebajo. “But most importantly, we plan to launch some big solutions specially tailored for Africans before the end of Q4 2022.”
Amid this promising backdrop, crypto has transformed the African landscape, laying the foundation for the African blockchain ecosystem of the future while also allowing local talents to connect with the brightest minds and resources from the broader crypto community.
