Africa is booming in terms of cryptocurrency adoption even though it is not yet a very big market for cryptocurrency but it is growing despite concerns and strict regulations in different countries. According to the BitcoinAfrica.io, the top five African countries with the most active local communities in cryptocurrency and who have adopted Bitcoin the most are South Africa, Nigeria, Zimbabwe, Kenya and Ghana.
According to DO4AFRICA in its article on “Cryptocurrency Adoption in Africa”, Nigeria has one of the fastest growing peer-to-peer bitcoin markets in the world, but on January 12, 2017, the CBN (Central Bank of Nigeria) has warned all banks and financial institutions in Nigeria never to use, hold, exchange or trade any virtual currency. On February 5, 2021, the CBN ordered banks across the country to close the accounts of anyone transacting in cryptocurrencies.
According to DO4AFRICA, Morocco, Algeria, Libya, Egypt, Zambia, Zimbabwe and Namibia have also banned the use of cryptocurrency. In Kenya, the government is neither receptive nor opposed to cryptocurrency. However, it also warns its citizens that it is not legal tender, and therefore offers no protection for any failures that may arise in the cryptocurrency business. In South Africa, there are no specific laws or regulations that address the use of virtual currencies. However, a working group has been created on the regulation of crypto assets examining the country’s position on the subject.
In Burundi, in a public notice dated August 20, 2019, the Bank of the Republic of Burundi (BRB) indicated that it had been alerted to the existence of investment and marketing activities of virtual currencies called also cryptocurrencies including Bitcoin, Ether, Litecoin, Dogecion, Onecoin, BTC, Fahari Cash Coin, Ello Cash Coin and other similar products. The BRB said these are means of payment not regulated by any monetary authority, the public notice reads.
In this regard, the BRB also reminded the public that no entity or financial institution was currently authorized to offer remittance services or other payment services using virtual currency. She advised the public to exercise caution and ensure that their investments or any other financial transactions are carried out by credible depository financial institutions duly authorized by the Central Bank.
In Tanzania, President Samia Suluhu Hassan has encouraged the Tanzanian central bank to take an interest in the subject of the financial inclusion of Bitcoin and cryptocurrencies within the country after several countries have already looked into the question. On June 14, 2022, Samia Suluhu Hassan ( quoted by the Cryptoast site in her article “Tanzania: the president encourages to prepare for the adoption of Bitcoin and cryptocurrencies”) , indeed encouraged the central bank of her country to take a closer look at these digital currencies. According to the President of the Republic, “Across the region, including Tanzania, they have not accepted or started using these paths.” She said: “My call is: you should start working on this development. The Central Bank must be ready for the changes and not be caught off guard.”
Emphasis has been placed on the indifference of institutions and governments regarding cryptocurrencies in East Africa.
As for Uganda (according to the press free site in its article “BoU blacklists cryptocurrency in Uganda”), the central bank has warned the public against using cryptocurrencies to transact companies, claiming that the Central Bank has not authorized any company to offer the services. The head of the National Payments System, in a notice dated April 29, said the Central Bank had noted with concern some entities advertising the conversion of cryptocurrencies to mobile money and vice versa, which he said , is illegal.
In short, you will have understood that no African country had yet legalized bitcoin. But in April 2022, the Central African Republic legalized the use of cryptocurrencies and became the first African country (and the second in the world after El Salvador) to make bitcoin an official currency, alongside the CFA franc. The announcement was made by the Central African presidency, assuring that it is the first country to do so in Africa. The National Assembly voted “unanimously” by the deputies present, the law “governing cryptocurrency in the Central African Republic” and the President of the Republic promulgated it.
On September 7, 2021, El Salvador was the first country in the world to adopt bitcoin as legal tender and the IMF immediately denounced a dangerous decision for “financial stability, financial integrity and consumer protection”.
In the aftermath of the Central African Republic’s adoption of bitcoin as its official currency, the International Monetary Fund (IMF) called for not seeing bitcoin “as a panacea against the economic challenges” facing Africa, while affirming that Cryptocurrencies “can contribute to a more robust payments system” on the continent, IMF Africa Department Director Abebe Aemro Selassie told a press conference. But the presidency of the Central African Republic considered that this step, on the contrary, places the Central African Republic on the map of the most courageous and visionary countries in the world”.
In conclusion, the resistance of regulators is and remains one of the biggest challenges in Africa, as indicated in the paragraphs above.
Cryptocurrency is not just a solution for the plight of the “unbanked”. It could also be seen as a method of allowing people to economically control their own wealth.
For the time being, only El Salvador and the Central African Republic have adopted bitcoin as legal tender, but other countries are considering doing so, some having initiated legislative processes in this direction.
Mediator Nkurunziza
