Sub-Saharan Africa records staggering crypto boom in 2022 amidst multiple obstacles

Between July 2021 and June 2022, sub-Saharan Africa’s cryptocurrency transactions totaled $100.6 billion.

This is according to a study note provided by Chainalysis at the end of the year’s third quarter. Despite its negligible percentage on global trade, this area has the most active marketplaces.

According to a study report issued at the end of September by Chainalysis, a New York-based American blockchain analysis business, bitcoin transactions in sub-Saharan Africa totaled $100.6 billion between July 2021 and June 2022.

This is a 16% increase compared to the period from July 2020 to June 2021. Despite this impressive increase, the area only accounts for 2% of all worldwide bitcoin transactions.

Frontrunners: Nigeria, Kenya, and South Africa

This little weight does not preclude sub-Saharan Africa from hosting the world’s most vibrant marketplaces. In this instance, South Africa, Kenya, and Nigeria, respectively rank 30th, 19th, and 11th on the Chainalysis-created global bitcoin adoption index. 

Nigeria, particularly, is a major user of virtual currencies. In October 2021, the government introduced eNaira, the Central Bank’s digital fiat currency. 

The maturity of the Nigerian market has prompted the biggest cryptocurrency exchange in the world, Binance, to initiate conversations with national authorities this month. The objective is for Nigeria to become the first nation in West Africa to create a virtual free zone. 

Retail, the bulk of transactions

According to the Chainalysis analysis, the retail segment dominates the cryptocurrency scene in Sub-Saharan Africa. Indeed, 95% of all transfers are retail payments, with 80% of transactions falling under $1,000. 

Massive usage of P2P (peer-to-peer) networks also characterises the region’s cryptography sector. Sub-Saharan Africa accounts for around 6% of total crypto trading activity. 

It surpasses Central and South Asia as well as Oceania, the regions with the second-highest quantities.

A means to escape poverty

Further, Chainalysis drew a distinction between Western and African nations in terms of the reasons why young people flock to digital currencies. 

Young people in Europe desire to grow their fortune. In contrast, in the African continent, it is more important to preserve or create wealth in the face of unfavourable economic situations. 

In fact, millions of young people in sub-Saharan African nations are jobless despite their degrees and credentials. In the lack of a stable job or employment, the bitcoin ecosystem offers a lifeline. For some, it is the only means to provide for their family.

A growth that will continue

According to the Chainalysis breakdown, the adoption of cryptocurrencies is driven by everyday need, particularly in nations where the value of local fiat currencies is dropping, such as Nigeria and Kenya. 

The company concludes by emphasising the significance of cryptocurrencies for cross-border financial transfers and business activities on the continent. 

They stress that the usage of digital currencies will continue to increase as long as people continue to encounter problems that they can address. 

For instance, cryptocurrencies protect funds during times of economic turmoil and enable cross-border transactions in regions with strict capital restrictions.