Blockchain
Cryptocurrencies and mobile payments improve financial inclusion in Africa
Africa’s shift towards digital financial platforms
As Africa moves towards a digital economy, cryptocurrencies and mobile payments are playing a vital role in promoting financial inclusion. Despite various challenges such as cost barriers to opening an account, high remittance fees, lack of identifying documentation, limited access to physical bank branches, and an economy that still largely operates on cash, the continent is emerging as a global leader in mobile money. transactions.
Today, Africa accounts for 70% of the $1 trillion global mobile money value and nearly half of registered mobile money accounts. The value of mobile money transactions in Africa increased significantly from $495 billion in 2020 to $701.4 billion in 2021. This trend suggests that the future of African financial services is both digital and mobile.
Adoption of mobile money and cryptocurrencies
Mobile money, an electronic payment technology that allows money transfers between mobile devices using a SIM card, has been instrumental in expanding access to financial services in areas where financial infrastructure is lacking. Furthermore, research shows that by 2025 at least 70% of all online transactions will be made with alternative payment methods such as digital wallets, mobile money and instant payments.
Despite the growing adoption of mobile money, broader financial services still do not reach the majority of African citizens. This gap has led to a surge in the use of digital financial services, especially cryptocurrency-enabled payments. Africa is one of the fastest growing cryptocurrency markets in the world, with tech-savvy consumers in Ghana, Nigeria and South Africa leading the way. Last year, the number of $1,000 retail transfers actually increased in sub-Saharan Africa, reflecting a growing trend of using digital currencies to solve problems related to financial inclusion and limited access to the banking system .
Challenges and opportunities
Although Africa leads the world in the number of mobile money accounts, the region is still plagued by low interoperability rates. Users often have to move money in and out of various wallets to complete transactions. This problem hinders the growth of electronic payments and limits the potential benefits of innovation and financial inclusion.
However, there is a significant opportunity for African fintechs to leverage the success of mobile money to drive the adoption of cryptocurrency-enabled tools. These tools can make payments even more accessible, accessible and convenient for everyday users. Implementing safeguards such as Know Your Customer (KYC) and Anti-Money Laundering (AML) in mobile money transactions using blockchain and cryptographic technology can drive secure, scalable adoption and address concerns related to organized crime.
As the global workforce continues to follow a remote or hybrid model, this opens up further possibilities for Africa to stimulate its economy with cryptocurrency-enabled payments. Africa’s workforce now has the opportunity to go global, lifting millions of people out of poverty and enabling remote workers to be paid efficiently with cryptocurrencies via digital wallets on their mobile devices.
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