The rise of cryptocurrencies in Africa

The rise of cryptocurrencies has been a hot topic globally, with Bitcoin and Ether leading the pack. However, the focus is shifting towards African cryptocurrencies as countries on the continent begin to explore the possibilities of digital currencies. One of the pioneers in this space is Tunisia, which has issued its own digital currency using blockchain technology. Additionally, Senegal is in the process of rolling out an electronic franc, with plans to expand its usage to other Francophone countries in Africa. To delve deeper into the topic, CNBC Africa recently interviewed Shireen Ramju, the Founder of Liquid Crypto Money, to discuss the risks and opportunities associated with African cryptocurrencies. Ramju highlighted the relatively slow adoption of cryptocurrencies in Africa compared to other regions, attributing it to the newness of the concept and the lack of tech companies in the region actively working on blockchain technology. Despite these challenges, she emphasized that there are developments taking place on the continent in the crypto space, indicating a growing interest and potential for future growth. One of the key concerns raised during the interview was the global acceptance of African cryptocurrencies. Ramju clarified that while traditional fiat currencies may not be globally recognized, cryptocurrencies operate on a different level, opening avenues for cross-border transactions and currency conversions. She noted that even though African countries may create their own digital currencies, the potential for global acceptance lies in their ability to integrate with the broader cryptocurrency ecosystem. With respect to regulatory frameworks, Ramju acknowledged the slow progress in gaining official endorsements from central banks in Africa. However, she pointed to the positive trend of major countries like Switzerland, Germany, Japan, and South Korea regulating Bitcoin, suggesting a potential roadmap for African nations. She also highlighted the initiative of countries like Tunisia and Senegal to develop their own digital currencies, signaling a shift towards embracing blockchain technology. The interview also touched upon the role of financial institutions in the adoption of blockchain and cryptocurrencies. Ramju noted that while banks are exploring blockchain technology for cost-saving measures and product innovation, the digitization of financial services is already transforming the industry. She referenced the South African Financial Blockchain Consortium, comprising industry leaders working on blockchain solutions to enhance efficiency and reduce costs in the long run. When asked about the investment potential of African cryptocurrencies, Ramju stressed the importance of user adoption in determining the value of digital assets. She highlighted the role of mass usage in driving up cryptocurrency prices, citing Bitcoin as a prime example. She cautioned that simply introducing a new African coin would not guarantee its success unless it gains traction among users. In conclusion, Ramju expressed optimism about the future of African cryptocurrencies, likening the current phase to the early days of the internet. She underscored the gradual evolution towards digital currencies on the continent, with governments and financial institutions beginning to explore blockchain technology. As Africa navigates the complexities of integrating cryptocurrencies into its financial landscape, the potential for growth and innovation in the digital currency space remains promising.