TL;DR

• Africa occupies has a large percentage of the world population, especially in the young generation, and Internet and smartphone penetration has increased dramatically in recent years.
• Several countries in North Africa (Algeria, Egypt, Libya, etc.), South Africa, and West Africa (Nigeria, Angola, etc.) are relatively wealthy. However, Africa as a whole has the highest poverty rate among the five continents, with Central African countries contributing the most to poverty.
• Traditional finance in Africa is not well developed, with few banks and slow and complex cross-border transactions. Crypto can help African residents transact across regions, but we need to know that African countries use different currencies and languages, which makes crypto projects difficult to expand.
• Inflation rates vary by region but are generally high. Even Large African countries like Nigeria have experienced significant hyperinflation, where money in the bank devaluates over time. African residents need cryptocurrencies as a financial tool to combat high inflation rates and other financial risks.
• In Africa, there has been an exponential increase in the volume and popularity of crypto assets and Web 3 projects.
• Governments are becoming more open to cryptocurrencies and blockchain, and the Central African Republic has adopted Bitcoin as legal tender.

Targeted Market

To open up the crypto market in Africa, we can consider building ecosystems and apps that target the less affluent majority of the African population and the unbanked African residents. Because Africa has a large population and the number of young people will continue to grow in the future, there is a market for GameFi projects and other Web 3 projects that young people where a higher acceptance rate can be predicted. In countries where the government is more supportive of cryptocurrencies such as Bitcoin, wallets suitable for the common users can be launched and there needs to be on-ramp and off-ramp support for several major African fiat currencies.

About Afircan Regions

• North Africa: includes Egypt, Sudan, South Sudan, Libya, Tunisia, Algeria, and Morocco
• Sub-Saharan Africa: Central Africa, East Africa, West Africa, and South Africa

Population

• Seventeen percent (1.3 billion) of the world’s population lives in Africa.
• Africa’s population grow rapidly, creating new investment opportunities.
• The United Nations projects that Africa will account for more than half of global population growth before 2050.
• Africa has the highest population growth rate among any major region, with the population of sub-Saharan Africa expected to double by 2050. The continent currently has a large number of young people who will enter adulthood and have children in the coming years.
• Africa will thus play a central role in the size and distribution of the world’s population in the coming decades.

GDP

• Africa’s continent-wide GDP in 2020 is $2.2 trillion (projected to be close to $3 trillion in 2022), only 1/6 of China, with a population similar to that of China.
• The country with the highest GDP in Africa is Nigeria, with nearly $450 billion and projected to be $510 billion in 2022.
• Nigeria is the most populous country in Africa, with over 200 million people, and its abundant labour force makes a vast domestic market. Moreover, Nigeria is a major African energy resource country and the number one oil producer and exporter in Africa, all contributing to Nigeria’s economic development.
• South Africa was once the only developed country in Africa and the only African country in the G20, but it is expected to have a GDP of $436.2 billion in 2022, slightly behind Egypt’s $435.6 billion, and relegated to third place in Africa. However, with a high standard of living and a relatively stable economy compared to other African countries, South Africa has been identified as a medium power in international affairs.

Currencies

• West African and CFA countries use the CFA franc as their official currency.
• The rest of the countries such as Algeria, Egypt, Guinea, Madagascar, etc. have their own central banks and their own currencies.
• CFA franc exchange rate: 1 USD = 620 CFA francs

Languages

• Africa is the most linguistically diverse continent in the world, with 800 to 1,000 independent languages spoken.
• As a result of colonization, most African countries now have French or English as their official or common language.
• However, in Africa, local people generally do not use the official languages, but rather their customary “dialects”.

Poverty

• More than one-third of Africa’s nearly 1.3 billion people are extremely poor in 2019, with the incidence of extreme poverty in sub-Saharan Africa reaching 40.1% excluding North African countries
• Sub-Saharan Africa’s economy (GDP or GNI) has been growing below the global average from 2015 to 2019, at only 2.31% in 2019, and economic/income growth has been slower than population growth, making an increase in poverty inevitable.

Inflation Rate

Cryptocurrency-Related News

• On April 27, 2022, the Central African Republic announced the adoption of Bitcoin as legal tender. The Central African Republic, rich in natural resources (gold, diamonds), is the second least developed country in the world. According to the World Bank, it has 71% of its population is below the poverty line and earns less than $1.90 per day. With 4.8 million inhabitants, its internet penetration rate is estimated at 10% and its bank rate is below 5%. The Central African Republic has not yet announced any measures to support the development of cryptocurrencies (no official digital currency wallets have been created).
• The African market has a large internet population: internet use in Africa grew by 23% between 2019 and 2021; as of October 2021, the overall number of internet users in Africa exceeded 580 million and internet penetration reached 33%. According to Statista data, the number of Internet users in Africa in 2020 is about 556 million, which is an increase of about 30 million Internet users in Africa in just under a year. As you can see, Africa’s Internet market space is growing fast and there is plenty of room.
• The continent has developed into a large region for crypto P2P transactions in 2020–2021, with Nigeria, Kenya and South Africa becoming active regions for crypto transactions in Africa.
• Africa’s demographics are dominated by younger demographics, which are more receptive to crypto finance. Africa is also home to the world’s youngest and fastest-growing population, with 60% of the continent’s population under the age of 25, and a young, tech-literate population that is most receptive to disruptive innovation, with these digital natives eager to participate in the technology revolution. According to Mineplex survey data, more than 80% of African users are interested in purchasing goods with cryptocurrencies, a figure that far exceeds that of Asian users (23%), European users (14%) and U.S. users (9%).
• Africa is extremely unbanked and cryptocurrencies are an important alternative to cross-border payments. Due to Africa’s long history of backwardness, the local banking infrastructure is poor. Sub-Saharan Africa has only 6 ATMs and 5 bank branches per 100,000 adults.
• At the same time, a large number of Africans live across borders and have a high demand for cross-border payments. According to the World Bank, remittances in sub-Saharan Africa will total more than $45 billion in 2021, but with a severe lack of foreign exchange reserves across Africa and strict controls on cross-border payments in some African countries, many businesses and individuals are choosing to use cryptocurrencies as an alternative way to process cross-border transactions. Over 88.5% of cryptocurrency transactions conducted by Africans are cross-border transfers.
• Many African users are turning to cryptocurrencies in response to the unstable political environment as well as inflation. Due to a long history of political turmoil as well as an economic depression, currency devaluation and hyperinflation have persisted in Africa. For example, the South African rand has lost more than 50% of its value against the U.S. dollar in the last decade, and other African countries like Nigeria and Kenya face similar problems with their currencies. For Africans, crypto-assets like Bitcoin are a way to hedge against unreliable local currencies and hyperinflation. According to data from a poll, the long-term goal of most cryptocurrency investors from Kenya, Nigeria and South Africa entering the digital asset market is to ensure a happy life for their families.

Africa Related Funds

1. Celo Fundation: https://celo.org/
2. Flori Ventures: https://www.floriventures.com
3. Unicorn Growth Capital: https://www.unicorngrowthcap.com/
4. Pantera Capital: https://panteracapital.com/
5. Crypto Valley Venture Capital: https://www.cvvc.com/

Africa Related Projects

1. Celo Foundation — CFA Franc Stablecoin

https://medium.com/celoorg/celo-and-duniapay-the-next-chapter-of-banking-in-west-africa-9825ef6ecf16

cXOF is a stablecoin for the CFA franc, launched by Celo in partnership with the Duniapay team, and can be used for remittances, savings, lending and online payments. It is exchanged with other stablecoins on Celo, such as cUSD, cEUR, etc.

1. AltCoinTrader

https://www.altcointrader.co.za/

The largest cryptocurrency exchange in South Africa, mainly used to buy and sell BTC/ETH.

1. Vibra

https://mobile.twitter.com/vibraafrica

Buy and sell digital currency, P2P trading, Nigeria Based exchange. Raised seed round of $6 million. Has the ambition to make a combination of wallet + learning platform + social platform.

1. Xend

https://xend.finance/

The founders of the project are Nigerians. The hope is to take advantage of DeFi’s decentralization to provide a credible and available financial platform for ordinary people. There is already an independent fiat deposit channel in Africa, and it also works with Compound, Aave, and Maker. When users’ assets are deposited into the platform, some of the funds will be put into these DeFi head platforms to earn interest and tokens. It has received $2.2 million in investments from Binance, Google Launchpad, NGC Ventures, Hashkey, AU21 Capital, etc.

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