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In the past few years, blockchain has become an “it” word in the fintech space. In the African context, this is mirrored by the emergence of blockchain-driven solutions, companies, groups and initiatives.
But which country in the continent would one say is leading in these advancements? The blockchain technology, no doubt, is being adopted in different parts of the continent.
Cryptocurrencies, on the other hand, are not only popular in Africa, but have also gone a long way to spur entrepreneurship across the continent. Nevertheless, it is only one instance of blockchain adoption.
First, lest one mixes the two, there are many differences between crypto and blockchain. But mainly, the blockchain is the distributed ledger which is the base to run cryptocurrency. Whereas cryptocurrency is the usage of token that is based on the ledger.
Singapore—one of the leading hubs for blockchain adoption—now has more than 400 fintech firms. That means there is one of such company one for every 14,000 people living in the country.
That’s just to give an idea of one of the things it takes to be a blockchain leader anywhere. Though one cannot quite place a figure on it, there is an increasing number of blockchain-based firms all over Africa.
South Africa, Ghana, Nigeria, and Kenya appear to be the forerunners of this revolution. This is because most of the users or customers in the continent are from these countries.
The monetary system of the region has constantly been subjected to change. Starting from the ancient barter system to cashless payment systems, the financial system has undergone advanced modifications.
Agreeably, Nigeria, Ghana, South Africa and Kenya are Africa’s leading countries on many fronts—like mobile money, investments, entrepreneurship, and the presence of innovative systems.
To buttress this point, Bitcoin is more popular in Nigeria and South Africa than anywhere else in the world. Most of the best-known blockchain-driven firms in Africa, however, are from South Africa.
Gradually, we can narrow it down. Perception, in this context, points to the manner in which each country is viewed in terms of its level of blockchain development.
Paxful’s inaugural list of top African women to watch in Bitcoin and Blockchain gives an insight into where most of these strides are coming from. For one, 4 out of the 10 women featured in the list are from South Africa.
Indeed, a quick Google search comprising the keywords “Top Blockchain Companies In Africa” would produce hyper-South African results. Chances are, the likes of Bankymoon, Yellowtail Software and Nona do hit your top right corner.
The list by Paxful is no different from those before it in the sense of most of the features being from South Africa. Most Top 10 lists see South Africa steal three to four spots, while Top 5 counterparts feature at least two initiatives from the country.
Nevertheless, Nigeria and Kenya are worthy contenders. Paxful’s list again, for instance, mentions 2 Nigerians and 1 Kenyan.
South African blockchain appears to be leading, in part, because of the economic advantage it has over other African countries, says Artur Schaback, COO and co-founder of Paxful—a U.S-based P2P marketplace with operations in Africa.
“South Africa claimed 3 spots on the list of ten wealthiest African cities, with Johannesburg, Cape Town, and Durban & Umhlanga. South Africa also has some globally renowned entrepreneurs in the space like Vinny Lingham (CEO of Civic), who most South Africans look up to,” the Estonian finance expert told WeeTracker.
In his opinion, the presence of these entrepreneurial bigwigs makes it easier for the upcoming entrepreneurs in the country to see blockchain in a brighter, easier light.
The ecosystem is developing rapidly, with hubs and aggregators springing up to solely cater to blockchain startups. South Africa has a strong blockchain community with scholars, entrepreneurs, and traders who meet up on a regular basis to exchange ideas and innovation.
Many companies are also finding ways to make use of the blockchain tech in their daily operations. It is still not conventional but the appetite for its application is growing rapidly.
South Africa boasts of Africa’s most industrialized or advanced economy. Though there are more tech hubs in Nigeria (90), South Africa has 78 of these innovative spaces. This, regardless of coming second in the continent, creates an opportunity for budding blockchain minds.
South Africa’s leadership in blockchain is also buoyed by its number of Bitcoin Teller Machines (BTMs), otherwise known as Bitcoin ATMs. Currently, the country has 7 of these machines, the highest number of such facilities in Africa.
There are 2 BTMs in Pretoria, 3 in Cape Town, 1 in Johannesburg and another in Nelspruit. Nigeria, on the other hand, installed its first and only BTM in February. Ghana has two of the machines, while Kenya hosts just 1.
Earlier this month, Binance CEO Changpeng Zhao announced that the company will launch a fiat gateway for South African users, allowing them to make Rand deposits.
Though Binance already has a foothold in 35 African countries, CZ said that South Africa was one of the bigger countries that the company had planned to service.
“Looking at South African specifically, crypto adoption continues to rise with the country being one of the top five countries in terms of cryptocurrency ownership,” he explained.
At present, the South African Rand is not the most valuable currency in Africa. However, the strength of a country’s currency adds another dimension to its country’s crypto—and then blockchain—development.
Per a recent Statista survey, South Africa, Turkey, Brazil, Colombia and Argentina were among the highest cryptocurrency ownership countries, with almost 20 percent of respondents reporting that they have used or owned crypto assets in 2019.
A similar study from We Are Social and Hootsuite also indicates that 10.7 percent of internet users in South Africa own cryptos—which is the highest ratio in the world.
Also, South Africa is generally more accessible for foreign capital, which gives the country a slight edge when it comes to investment. It is currently the second-largest economy in Africa behind Nigeria, but it’s more diversified.
In the past, South Africa has mainly been focused on the mining and agricultural sectors. But there’s been a change in recent years, as the country advanced its economy by shifting its focus to tourism, financial services and the tech sector.
Africa has a checkered history with Bitcoin regulations. Some governments are not so keen to adopt, some are, while others say their citizens should thread as they wish. This has created a pool of challenges for digital asset exchanges and custody providers who want to expand their businesses into African territories.
South Africa’s regulatory landscape could be a major drive for the blockchain and crypto sectors. For instance, the South African Reserve Bank does not currently oversee, supervise or regulate crypto assets. But the apex bank says it will continue to monitor this sector as it evolves.
That is significantly different from the stance of the Central Bank of Nigeria, which is basically a mix of warning and liberty. The Kenyan government and the country’s central bank have been rubbing minds on how to regulate Bitcoin. But the last known stance from the administration is that Kenyans should be wary of crypto investments.
South African Finance Minister Tito Mboweni said the country is on the lookout for a unified intergovernmental cryptocurrency regulatory framework, and established a working group to explore the opportunities of tokens and blockchain technology within the country.
This is one of the most hopeful governmental stances on crypto and blockchain in Africa. So, this in combination with the other factors, makes it easy to see why South Africa leads in this regard in Africa.
Definitely, Nairobi, Kenya’s capital, has made major progress to emerge as one of the startup hotspots in Africa to the point that it is being referred to as a “Silicon Savannah”, says Paxful’s Shaback.
“The fintech scene there has come a long way too, with M-Pesa being one of the most successful digital wallets in Africa. It shows the progressive nature of Kenyans and their willingness to explore emerging technologies.
The willingness and acceptance of newer exciting technologies along with the exuberance of the Kenyan youth make Kenya the perfect breeding ground for blockchain evolution.
Featured Image: Daily Maverick
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