Resources/blog/Crypto in Africa

Crypto in Africa

Last Updated: a year ago
Crypto in Africa

During the GFC it felt more relevant to consider an alternative digital currency. But after an epic 10 year bull run in equity markets these feelings aren’t exactly prominent in the public mind.

It is easy to feel comfortable in the first world, but how does it feel in the heart of Africa? I caught up with Omusawaba, a crypto enthusiast from Kenya, to get an inside look at the local state of crypto.

Is Africa’s finance industry really going to use crypto?

In Kenya bank accounts are redundant. The first world talks about the world’s unbanked population being a problem, but essentially Kenyans - even the very marginalized ones - do not need a bank account. What they need is a basic mobile phone that can function as a bank account thanks to M-Pesa.

In 2016 M-Pesa handled 6 billion transactions. These ranged from helping customers send remittance payments, paying for everyday purchases, and even operating a small businesses. At this point in time, M-Pesa has literally become the gold standard for local money transactions in East Africa. Digital currency is already the norm in Africa.

So where does cryptocurrency come in?

Some real life problems that could have been solved by cryptocurrencies:

  • In 2016 Nigerian government put restraint on access to the US dollar.
  • Zimbabwe has a super inflated economy (currently 20.85%) and this has left citizens looking for reliable means of storing value.
  • Very opaque and disorganized banking systems.
  • Real difficulties moving money across borders.

Having suffered repeated financial meltdowns, many young Africans are embracing cryptocurrencies. Tanzania, Kenya and Nigeria are experiencing widespread crypto adoption and transactional usage of digital currencies like M-Pesa and bitcoin. They are setting up the stage for cryptocurrencies to thrive in Africa.

What blockchain applications are there in Africa?

Kenya has already established a blockchain task-force that will oversee how well it can be adapted by the government ministries. The Kenyan capital market regulator is planning to come up with a regulatory sandbox that will be geared towards promoting fintechs. Lets look at the main blockchains applications that are being explored in Kenya:

Mobile Money Services

In a recent interview with Citizen TV Bob Collymore, the CEO of Safaricom (M-Pesa), made a revelation that the giant telecom intends to look into blockchain to scale its mobile money service beyond Kenya. According to the CEO, blockchain technology will help counter fraud.

Land Ownership

The current president of Kenya, Uhuru Kenyatta, has instructed digital experts to explore how blockchain technology can be applied to land sector management where creating foolproof digital registries could reduce malpractice related to parallel land ownership.

Government Transparency

Joe Mucheru, the current Minister for Information, Communications, and Technology (ICT), has also requested the Central Bank of Kenya to craft laws that will regulate institutions trading on bitcoin to educate their users on social savings and investment. On top of that, they should also introduce frameworks that ministries can use blockchain technology for efficiency and transparency.

Social Saving Groups

The Chama Pesa is a savings app allows users to create a profile and join or create a chama (swahili word for merry go round). Chama members have the option of either opening new accounts in different contracts or other instruments. Chama Pesa works with private and public keys in the blockchain technology. More importantly it works through the use of smartphones.The first two accounts of a member are for shares and local currency. Consequently, money can be moved between accounts and use it for various purposes. Chama Pesa is in its alpha testing stage and as a safety precaution. Its developers are in the process of introducing a distributed app (DApp) that will enable the distribution of the group’s information on a blockchain. So in a situation where one of the member loses their phone, they can easily recover their information through a secret passphrase. According to Chama Pesa founder Eva Stowe, banks will not like it in the future because Chama Pesa will be providing a platform that the banks are still not able to give.

Tracking Food Aid Vouchers

World Food Programme is already using Ethereum to transfer and distribute vouchers based on cryptocurrency funds for humanitarian relief efforts in war ridden Syria. Africa can be likened to Syria in many ways. They managed to transfer cryptocurrency vouchers to 10,000 people in the region.

Final thoughts?

Smart contracts could help the poor in Africa transform their lives. If M-Pesa allowed small shop owners to become bankers, think about what open blockchains like Ethereum could do. The technology would allow anyone to become an entrepreneur or investor thanks to its on-chain verifiability in combination with escrow options for withholding payments until some conditions are met.

With this in mind, there is no doubt that the blockchain use case in Africa is an interesting one, especially when it touches on the telecom industry and financial sector.

The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Cryptotaxcalculator disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.

Shane Brunette


Shane Brunette founded CTC back in 2018 after dealing with his own crypto tax nightmare. He has worked closely with accountants and tax lawyers to make it easy for fellow cryptocurrency users to be tax compliant.

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