Supporting Crypto Growth in Africa
Discussions with Ambassadors of Botswana, Sudan, and Lesotho
Over the past few months, representatives from Alchemy Pay have held initial meetings with ambassadors and government officials of Lesotho, Sudan, and Botswana. These were exploratory discussions to see about possibilities for future collaboration towards the growth of the crypto industry in these nations.
Although cryptocurrency still tends to be focused on as an investment class, there are regions of the world where blockchain technology offers solutions to very real financial problems. Amid the all-time highs, the bull and bear markets, and the current excitement surrounding the web3 metaverse, it is easy to overlook regions where blockchain technology and cryptocurrency is already providing serious utility for its citizens.
In Africa, cryptocurrencies have the potential to help people escape poverty by overcoming endemic corruption, high inflation, lowering remittance costs, and increasing access to financial services. These are countries where even accessing traditional banks or credit cards is nigh on impossible for many people.
Crypto, being native to the internet rather than sovereign states, is borderless which makes it ideal for cross–border remittances which, when involving African states, in particular, are currently eating up as much as 15% of a transaction. The traceability and transparency of blockchain allows crypto transactions to be tracked and makes corruption within the blockchain itself impossible. Although price volatility is clearly still an issue, the rise of stablecoins has the solution to this. Regardless of its volatility though, bitcoin has already become a tried and tested form of money for many African businesses.
There are signs that crypto is growing roots in Africa. It is not surprising that the inclusivity of crypto is appealing to citizens of countries with a history of instability or inability to access traditional financial products. In these regions, crypto is no longer an abstract form of investment or speculation but a very real form of finance being used daily by citizens.
Speaking to the Financial Times in September, Kim Grauer of the leading blockchain analysis firm, Chainalysis, said of the crypto movement in developing nations,
“While everyone was paying attention to Elon Musk’s tweets, and which institutional investor or CEO was saying what they thought about bitcoin, there was this entire story unravelling in emerging markets around the world that’s really powerful… There’s a massive crypto footprint in many of these countries . . . and a massive amount of entrepreneurial opportunity.”
Even prior to crypto, the success of M-Pesa made it very clear that citizens needed something that bypassed exclusionary and expensive traditional finance in order to transact and conduct business. In 2007 the mobile provider, M-Pesa, launched an SMS-based system that enabled users to deposit, send and withdraw funds using their mobile phones. Customers didn’t require a bank account and could transact at any of the country’s 40,000 agent outlets. In less than two years it became the leading money transfer method in the country, with over 50% of people sending money via M-Pesa and over 65% receiving funds through the system.
Crypto offers that same level of inclusivity but with far more sophistication and scope.
While Cardano’s work in Ethiopia is well known, Alchemy Pay’s initial meetings with government officials from Botswana, Sudan, and demonstrate there are other progressive and pragmatic African governments who also see the benefits that blockchain-based finance can have for their citizens.
While our meetings were held primarily to establish common goals and frameworks for collaboration there are certain areas Alchemy Pay can play a number of crucial roles.
We are currently looking at providing both online and offline merchants with convenient, flexible and secure methods to accept crypto payments — making crypto usable as a medium of exchange. We would make this as viable as possible for businesses in these nations, taking into account the limited resources some have.
In terms of growing the crypto industry as a whole in these nations, we are looking at supporting the raising of capital from crypto investment community via security tokens. Given our experience in the space, we could advise and support the securitization of their assets. Security tokens are crypto tokens that are backed by real-world assets (hence labelled as securities — like bonds and stocks). Security tokens can be easily exchanged for crypto assets (BTC, ETH, USDC etc.) and can be easily traded on a secondary platform such as exchanges or digital assets platforms that provide liquidity for assets that would otherwise be illiquid. This increased fungibility appeals to global investors by allaying concerns about their ability to sell.
This is a new frontier for us and for these governments but innovation and positive reform of the financial system is why we are in this industry and we believe we can provide real value to people in developing nations.