The digital assets opportunity in Africa

According to Chainalysis 2024 Geography of Crypto Report, Sub-Saharan Africa accounts for the global cryptocurrency economy’s smallest share, representing 2.7% of transaction volume worldwide between July 2023 and June 2024, with an estimated USD 125 billion in on-chain value during this period, a USD 7.5 billion increase compared to the previous year. But adoption of digital currencies may have a different flavour in the continent and a significant impact as it contributes to transforming the financial landscape of the region.

The adoption of digital assets is indeed gaining momentum in Africa, with evidence of growing acceptance and adoption of digital assets. The continent is home to several high-ranking nations according to Chainalysis’ global adoption index: Nigeria is a top global player, ranking second worldwide, while Ethiopia (26), Kenya (28), and South Africa (30) also made the top 30.

This trend is driven by several factors:

• the openness of a young population to innovation – Africa’s population is young and should increase from 1.5 billion people today to 2.5 billion in 2050;

• increased number of use cases to overcome the difficulties associated with access to the dollar and the inflationary context;

• emerging blockchain hubs across the continent;

• increased international and regional collaboration and partnerships;

• increased government and regulatory support.

Africans are starting to see the real-world utility of cryptocurrency, especially in day-to-day transactions, which is a shift from the earlier view of crypto as a scheme for speculation purposes. Businesses are leveraging crypto for payments, as a hedge against inflation, and for more frequent, retail-sized transfers, with regional or international counterparts.

Stablecoins have become a key element of Sub-Saharan Africa’s crypto economy, accounting now for approximately 43% of the region's total crypto transaction volume (18,1% for Bitcoin). As in Ethiopia, Ghana, and South Africa, stablecoins are also a major part of Nigeria’s crypto economy, accounting for approximately 40% of all stablecoin inflows in the region — by far the highest in all of Sub-Saharan Africa.

A major driver of stablecoin adoption in Africa is the high volatility of local currencies and foreign exchange crisis which are gripping many African countries. Businesses are struggling to get access to the dollars they need to operate, and dollar-pegged stablecoins - like USDT and USDC - have gained traction, offering businesses and individuals alike a way to facilitate regional and international payments, and support cross-border trade.

People don’t care about crypto itself but choose its practical use cases, sometimes the end-user not knowing that the solution he is using is based on crypto:

• Food producers may use stablecoin to pay suppliers abroad.

• African fintech companies may rely on stablecoins to manage large sums of local currency, which they can then convert into stablecoins to facilitate cross-border payments.

• Institutionals may use stablecoins as a tool for managing liquidity and reducing exposure to currency volatility. In countries where the value of the local currency fluctuates, stablecoins could be an attractive option for businesses looking to hedge against currency risks.

• For individuals sending money to family members abroad or paying for expenses, stablecoins provide a faster, more affordable alternative to traditional remittance services.

Cross-border remittances are a major use case for stablecoins in Nigeria. The average cost of sending a USD 200 remittance from Sub-Saharan Africa outside the continent is approximately 60% lower when using stablecoins compared to traditional remittance methods facilitated by fiat currency, according to Chainalysis.

According to Forbes, as of Dec 2024, Africa accounted for 3% of the total global Bitcoin mining, with Ethiopia alone producing 2.5% (more than double what the entire continent produced a year before), entirely via renewable energy.

Over USD 1 billion has been spent on mining infrastructure in Ethiopia in 2024, with other countries such as Kenya joining the ranks of African countries keen on leveraging Bitcoin mining. Other countries with excess local electrical capacities, such as Angola, are targeted by international Bitcoin mining businesses. Africa is a growing hotspot for global Bitcoin miners, as it hosts some of the world's cheapest green energy, such as Ethiopia's 3.2 cents per kilowatt-hour.

Many African jurisdictions are reversing prior digital asset bans and beginning to establish regulatory frameworks instead, whereas some bans persist mostly due to the restrictive stance of monetary unions and regional economic communities —such as in the West African Economic and Monetary Union and the Economic and Monetary Community of Central Africa. Some countries (particularly where digital asset adoption among the general population is still very low) are currently not regulating the sector at all, adopting a ‘wait and see’ attitude and focusing on market monitoring and research. Others are beginning to explore different regulatory tools to better grasp the regulatory implications of digital asset applications and are assessing specifically which regulatory bodies should be involved. In some cases, they are looking beyond just the Central Bank and the financial services regulator and involving technology regulators as well.

Overall, there seems to be a shared understanding among governments that this innovation ‘is not going away’ and that it is imperative for regulators to keep up, rather than ban or ignore, this new development and push it into the unregulated space.

For the first time, virtual assets and investment contracts are formally recognised as securities in Nigeria, following the Investment and Securities Act (ISA) 2024 signed into law by its President Bola Tinubu. This new legislation comes after years of regulatory uncertainty and tension between the Nigerian government and the burgeoning crypto community. In February 2021, the Central Bank of Nigeria (CBN) issued a directive prohibiting financial institutions from facilitating cryptocurrency transactions, citing concerns over money laundering, terrorism financing, and the lack of consumer protection. The ban sparked widespread outrage, particularly among Nigeria’s tech-savvy youth, who had increasingly turned to cryptocurrencies as an alternative store of value amid inflation and economic instability.

About Dr Estelle Brack

Estelle Brack scales impact-driven fintechs, connecting capital, talent, and projects to transform the future of financial services in Africa. Estelle holds a Ph.D. in Economics & Banking and 25 years of operational experience in the banking sector - especially in Payments – with a global vision.