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Cryptocurrencies: adoption and transfers on the rise in Africa

Karim Husami

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Cryptocurrency

Transfers made through mobile money applications have become increasingly popular in Africa leading to a rise in the use of cryptocurrency in Nigeria, Africa’s largest economy.

According to Statista, Nigerians were the most likely to say they used or owned cryptocurrency, out of 65 countries.

Cryptocurrencies used in Africa include Bitcoin, Dash and Lisk in Botswana, Ghana, Kenya, Nigeria, South Africa and Zimbabwe.  Rakesh Sharma, a business and technology journalist said, “Africa is rarely mentioned among the largest markets for cryptocurrency, but it may be set to steal a march over other markets.”

There are a number of reasons for the African cryptocurrency surge, including, the growing generation of adaptable young professionals and entrepreneurs who are tapping into the revenue opportunities presented by digital transformation. Blockchain-powered apps are facilitating growth and financial stability for many types of businesses.

In order to encourage use of cryptocurrencies, the market is being led by well-known advocates of the growing sector. For example, Twitter’s CEO Jack Dorsey announced in December 2019 his interest in the cryptocurrencies market in Africa.

Cryptocurrency acceptance on the rise

Nigeria has several local platforms that encourage and support purchases and sales of cryptocurrencies with the national currency. One such platform is NairaEx which is the largest local cryptocurrency exchange that supports several payment methods to buy and sell BTC including bank transfers and bitcoin remittance platform BitPesa.

In addition, a various number of Nigerian companies already accept payments in cryptocurrency, according to buybitcoinworldwide.com.

Transfers made easy

Cryptocurrency transactions are a preferred method as they are faster and less costly compared to traditional international money transfers. This type of currency witnessed a boom because of local currency risks and hyperinflation. For example, some people turned to trading in Bitcoin instead of the Zimbabwean dollar after it skyrocketed in 2015.

People will maintain their cryptocurrency and spend it without exchanging to national currencies, which may protect and preserve their savings against currency depreciation and price instabilities.

“For Africans in the diaspora sending money back home, the cost of bank transfers is astronomical,” said tech entrepreneur Emmanuel Darko. “It’s sometimes as high as 20%. … But there are some cryptocurrencies that allow [people to] practically send money back to Africa for free,” he says.

Cryptocurrency challenges

However, the instability of its value still poses a risk to the cryptocurrency buyer. The fall and rise of its prices could potentially lead to unexpected losses.

Cryptocurrency still lacks the acceptance of many countries and companies due to fear of changes in value while human error could also expose the transactions to potential cybersecurity risks. 

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Journalist for 7 years in print media, with a bachelor degree in Political Science and International Affairs. Masters in Media communications.

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MTN Rwanda launches mobile money FinTech services

Yehia El Amine

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Mobile Money

MTN Rwanda announced late last week the launch of a FinTech subsidiary called Mobile Money Rwanda LTTD, to provide and manage mobile money services throughout the country.

The announcement – which was made as the operator received approval from National Bank of Rwanda to launch the FinTech service – also places Chantal Kagame as its Chief Executive Officer to drive business development, strategy, innovation, and day to day operations of the company.

According to a statement by the South African courier, the setting up of Mobile Money Rwanda Ltd is in line with MTN Rwanda’s strategy to lead digital solutions while contributing to the national economic strategy on enhancing cashless transactions that offer convenience and security to all Rwandans.

“We are very glad to announce the establishment of Mobile Money Rwanda Ltd as a wholly owned subsidiary of MTN Rwanda. One of the key pillars in our strategy is to establish platforms that our customers find valuable. This restructure will ensure that the Mobile Money business remains agile, well poised for future growth and accelerated innovation. Mobile Money has matured over the last ten years in Rwanda, and this marks a pivotal milestone in our journey toward a cashless economy,” MTN Rwanda CEO, Mitwa Ng’ambi said in a statement when speaking about the new standalone firm.

In parallel, Kagame highlighted the company’s commitment to enhance the MoMo user experience and keep innovating products and services aligned with their digital ambition.

“The transition process to a standalone business has now kicked off and we look forward to cementing Mobile Money Rwanda Ltd as a key FinTech player in the Rwandan market,” she added.

The South African-based telco already provides FinTech services under the name of MoMo, a service that has been in operation since 2010. According to figures by the company, MTN currently boasts about six million subscribers.

MTN claims the largest market and value share in the increasingly competitive telecoms sector of Rwanda.

The announcement comes in line with MTN’s ambition to expand within the large African market, as the courier placed a bid to receive an operating license in Ethiopia, as the country looks to liberalize its telecoms sector and digitize its economy.

Prior to Chantal’s appointment, she held the role of Chief Business and Corporate Affairs Officer since she joined MTN in 2018. She is a senior Telecom Executive with over 19 years of experience in Multinational Telecommunications.

She has a track record of excellent achievement in areas of Executive Leadership, Sales and Distribution, Mobile Financial Services, Strategy Development and Execution, Corporate Affairs and Credit Management.

Prior to joining MTN Rwanda, Chantal was the Deputy CEO/COO at Tigo Rwanda for 3 years and Head of Sales, Distribution and Corporate Affairs at the same company from 2011 to 2015.

The establishment of Mobile Money Rwanda Ltd does not in any way affect nor change the delivery of services to current Mobile Money customers. Mobile Money customers will continue to enjoy access to the wide range of MoMo products and services, the over 30,000 Mobile Money agents and 60,000 MoMoPay merchants across the country.

MTN foresees an even brighter future to further expand and deepen its offerings to the public in line with Rwanda’s vision to become a fully cashless economy.

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UK to explore Central Bank digital currency

Karim Husami

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digital currency

The Bank of England and the British Treasury have announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential new form of digital money issued by the Bank of England and for use by households and businesses.

While the announcement was made by Chancellor of the Exchequer Rishi Sunak as part of the UK Government’s response to the Kalifa Review, the new digital currency would be alongside cash and bank deposits, rather than replacing them.

Aims of the task force

In addition, the Taskforce aims to ensure a strategic approach is adopted between the UK authorities as they explore the digital currency, in line with their statutory objectives, and to promote close coordination between them. The Taskforce will:

  • Guide evaluation of the design features a digital currency must display to achieve our goals.
  • Coordinate exploration of the objectives, use cases, opportunities, and risks of a potential UK CBDC.
  • Support a rigorous, coherent, and comprehensive assessment of the overall case for a UK CBDC.
  • Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation.

The Taskforce will be co-chaired by Deputy Governor for Financial Stability at the Bank of England, Jon Cunliffe, and the Treasury’s Director General of Financial Services, Katharine Braddick.

Commenting on the announcement, John Whelan, MD Digital Investment Bank & Innovation, Banco Santander expressed his excitement “to see this development from the Bank of England supporting the opportunity to use tokenized cash assets on next generation payment systems, enabling on-chain wholesale exchange of value.”

In parallel, the Bank of England announced the establishment of a CBDC Unit, which will lead its internal exploration around the currency, as well as leading the Bank’s external engagement on CBDC, including with other UK and international authorities.

Banks searching for digital currency

“We’re launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC),” British finance minister Rishi Sunak told a financial industry conference.

Other central banks are also looking at whether to set up digital versions of their own currencies, essentially widening access to central bank funds which only commercial banks can use at present. This process would speed up domestic and foreign payments and reduce financial stability risks.

While China is a front-runner to launch a CBDC, the European Central Bank said it was studying an electronic form of cash to complement banknotes and coins, but any launch was still several years away.

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Bitcoin millionaire puts money on Greens in German election

Associated Press

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Greens in German election

A German software developer who made a fortune from bitcoin has given the environmentalist Green Party one of the biggest political donations in the country’s history in hopes it will win this year’s national election — and consider banning the digital currency.

Moritz Schmidt’s donation of 1 million euros ($1.2 million) to the Greens made headlines this month, as the party traditionally receives only small sums. Such a large gift is rare in German politics. Parties in the country receive most of their funding from members’ dues and state aid linked to election results.

“I have benefitted immensely from the bitcoin bubble. It’s been a wild ride, and the proceeds are unearned riches really,” Schmidt told The Associated Press in an email interview this week. “I’ve been sort of waiting for the right opportunity to donate a larger sum.”

The 39-year-old from the northeastern town of Greifswald, who hadn’t previously featured on any lists of major political donors, said he bought “a couple thousand euros” worth of bitcoin in 2011, shortly before it crashed, wiping 90% off the value of his holdings. Since then, bitcoin and other cryptocurrencies have repeatedly surged and slumped on investors hoping to turn a quick profit.

The value of a single bitcoin has dropped from over $64,000 to about $50,000 in the past ten days.

Schmidt, who made about 2 million euros ($2.4 million) by gradually selling his bitcoin over the years, said he learned in 2017 that the virtual currency consumes a vast amount of electricity. While the details are hotly debated by bitcoin fans and critics, experts say the power required to generate and trade cryptocurrencies is considerable.

“Being an energy hog is built into the bitcoin system,” said Schmidt.

The Greens advocate strong environmental policies to curb greenhouse gas emissions and fend off the threat of climate change.

Schmidt, who is cautious about the Greens’ prospects of winning the election outright despite their current high poll ratings, says he decided to help fund their campaign rather than donate toward an environmental project because “giving it to a political party that has environmentalism as its core value will have a much bigger impact.”

The Greens nominated 40-year-old lawmaker Annalena Baerbock as their candidate Monday to succeed long-time conservative leader Angela Merkel as chancellor in the Sept. 26 election. While the party doesn’t mention bitcoin’s environmental footprint in its program, it does want such currencies to be “traceable” — making bitcoin less attractive to many of its fans.

“I don’t think regulation will do anything unless it crashes the price down to levels that make bitcoin uninteresting as an asset and unusable as a global currency,” said Schmidt. “I believe that, in effect, bitcoin will need to be banned.”

Schmidt dismissed comments that suggested he might be trying to redeem himself for having traded in the cryptocurrency.

“Had I looked for absolution, I’d have turned to the Catholic Church,” he said.


BERLIN (AP) — By FRANK JORDANS Associated Press

Follow AP’s coverage of climate change: https://apnews.com/Climate

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