In the last three years, the popularity and awareness of Bitcoin peer to peer trading has continued to grow within the African continent. Hence, leading cryptocurrency exchange platforms such as Localbitcoins, Binance Uganda, Paxful, and Localcryptos all aiding purchase and selling of Bitcoin among others have their eyes set on Africa. It is now emerging the continent’s peer-to-peer transactions are ballooning and taking on leading markets renowned for being huge on Bitcoin transactions. For instance, in May 2020, Africa marched past Latin America to occupy second place in terms of P2P trading volume just behind North America, according to data aggregated by usefultulips.org. Among the leading nations in Bitcoin use on the African continent, including Nigeria, South Africa, Kenya, and Ghana. Hence, it begs the question of the leading cause of this increased adoption and growth of Bitcoin holders and users in Africa. Therefore, let us examine some of the maybe leading reasons these peer-to-peer transactions on the continent.
A young and Literate Population
Africa has a population of 1.34 billion people. According to Mo Ibrahim Foundation report of 2019, 60 percent of this population is under the age of 25. Consequently, this makes Africa the continent with the youngest population globally.
Interesting, countries across the continent are committed to improving education access and standards, yielding a youthful and literate population. The literacy rate in the Sub Sahara region continues to improve over the years, with an average of 64.09% in 2014, while 2017 rose to 65.58%. What’s more, countries such as South Africa, Nigeria, Kenya, Ghana, and Zimbabwe are recording some of the highest literacy rates in Africa at 87%, 62%, 82%, 79%, and 89%, respectively.
Sadly with such an active and educated population, a lot of youths in Africa remain jobless. At least 50% of the graduates in Africa have no jobs, which draws them to seek informal employment opportunities. Some of these youths who maybe are living in the urban areas while they continue to pursue gainful employment are attracted to any chance that can eke a living. Eventually, drawing several youths to Bitcoin investment opportunities available in the eco-system such as peer to peer trading and earn a commission from each trade. There are successful stories that show this with young Africans leveraging on their income opportunities by venturing into trading opportunities such as this example of a young lady from Kenya trading on Bitcoin and accepting the cryptocurrency in her business.
Smart Phone Use and Mobile Money
A lot of innovation in Africa is as a result of necessity. At the center of this innovation are mobile devices that have and continue to transform lives across the continent. Exciting Africa records some of the highest growth in terms of numbers of people with mobile phone ownership. The International Telecommunication Union (ITU) records at least 80.8 per cent of Africans own a mobile phone.
Further, these mobile phones help Africans to access Internet and been central to transforming lives across the continent. The ability to afford devices, especially smartphones below $100 a unit, has led to massive internet penetration, especially among the youths due to access to cheaper Internet available via the undersea cables.
Hence, cell phones are transforming lives across Africa, with the young able to connect with the rest of the world, engage and learn of emerging opportunities within the digital economy. For instance, e-commerce is emerging a source of income for lots of graduates who ship goods from overseas and sell them online via available online marketplaces such as Jumia as well as social media platforms. Such online marketplaces will create at least 3 million jobs for youths on the continent by 2025.
Growth of these online marketplaces and e-commerce via social media is gaining traction in Africa. For instance, there are online Facebook marketplaces where people trade with each other allowing the youth to avoid the enormous cost of running a brick and mortar business. Unlike traditional companies with physical premises, some of these sellers advertise their products and services online at zero cost and charge buyer delivery fees, which further creates more employment down the supply chain. In Kenya, such online groups are quite popular, with some having over 400,000 members, some available via these links Kilimani Mums Marketplace and Kenya Online Market. Similarly, Nigeria has groups such as Buy, Sell and Trade Nigerians, and GidiBox.
Across these platforms for those in the know, they have found it easy to sell their goods and services aided by peer-to-peer Bitcoin transactions. Meaning they can engage in online commerce, enjoy near-instant transfer of funds, security offered by escrow services, and experience the new world of finance.
Financial Intermediaries Bureaucracy and High Fees
Banks and other financial service providers in Africa prove to be a bottleneck in aiding commerce, especially in instances involving the selling of goods and services online. For example, in ordinary circumstances, banks require certain documents to open a bank account or even access financial services. Most African countries need one to have a valid ID card to open and access bank accounts if they do open one. Often the process of obtaining the ID card and opening a bank are not streamlined, hindering a chunk of the population from accessing financial services.
Banks have set certain limits hindering customers from withdrawing set maximum cap without explaining the source of funds and intended use. In Kenya, it isn’t easy at present to transact over Kes 1,000,000 equivalent of $10,000 without approval from the branch’s management. The situation is complicated if an individual is receiving an international money transfer, especially if the person is a new customer to the bank with no past account history. Even if one has the necessary documents to prove a transaction is legit, it will take days for the funds to clear and reach the recipient. In fact, it’s worse when using the so-called peer-to-peer finance service providers such as PayPal. Individuals have a terrible history of their PayPal accounts permanently limited and withholding their payments for at least 180 days. Below is a screenshot of a Kenyan who earns by providing his services online to both local and international clients. He is asking for help on an online community on how to activate his PayPal after going through the terrible experience of having the only payment channel he has been using for years. Yet, one day they strike and limit his account.
These are some of the issues driving Africans to opt to use Bitcoin as a means of payment owing to the frustration with traditional and “modern” payment systems. Notwithstanding, the cost of transactions, even with commercial banks is very high for an ordinary person trying to make ends meet. In Kenya, it costs an average of $45 to run and maintain a bank account. Additionally, not forgetting the inconvenience of banks being closed during certain hours and days limits individual access to own funds.
Mobile Money and Crypto in Africa
Mobile money is a significant innovation in Africa, and no doubt, its transforming lives. At least 60 per cent of the world’s mobile money occurs through Africa’s based platforms. A fascinating relationship between mobile money and cryptocurrencies has led to more adoption and peer-to-peer trading on the continent. Platforms such as Localbitcoins and Paxful allow traders in Africa to convert their Bitcoin to fiat. Among the options available include mobile money such as Mpesa, Airtel Money, and MTN. Hence, for those trading using mobile money, they do love the convenience that comes with these platforms and can buy or sell Bitcoin anytime any day, as there are traders always online to facilitate such transactions.
Thriving Bitcoin Communities
At the peak of an all-time high so far for the price of Bitcoin, Coinweez organized a meet-up with the theme “Bitcoin Opportunities” before the kick-start of the session was fully packed. This is just evidence of how interested people are in learning new income opportunities and, more so, Bitcoin.
Evident as a media authority in the space both locally and internationally during this specific meet-up, people learn’t of what Bitcoin is and challenges that come with it. It is in the background that a lot of people on the continent think of Bitcoin as another get rich quick scheme and end up losing their hard-earned money. It is no doubt surfing the Internet via online communities and social media people associate Bitcoin as being a Ponzi scheme missing out on the whole revolutionary technology the world is experiencing.
Nevertheless, before the COVID-19 pandemic stakeholders in the Bitcoin and cryptocurrency industry, both local such as the Blockchain Association of Kenya (BAK) and international players have been holding meet-ups to educate interested people of this disruption to the banking and finance industry. Even with the on-going pandemic, some companies such as Paxful are holding online/virtual meet-ups to educate the masses about Bitcoin and possible income opportunities in the eco-system. This will lead to more awareness and expect a surge in Bitcoin peer-to-peer trade in the coming days. People are hungry for information and income-earning opportunities within the continent, and Bitcoin may be part of the African renaissance.