How can cryptocurrency contribute to the development of Africa?

Bitcoin as a vector of development in Africa…Many believe in it, in fact. Let's take the question in its broadest sense and try to provide confirmation.

We talk about blockchain as the true panacea of ​​the contemporary world. We had to write an article on the expected performance of the blockchain. More precisely, in terms of development. Even more than blockchain itself, cryptocurrencies can have a positive impact on the economy and development in Africa. We have already spoken to you about best cryptocurrencies in Africa and even blockchain projects in Africa (always more numerous).

Now, we will focus more concretely on their impacts on the African economy.

Cryptocurrencies have the potential to improve the lives of some of the world's poorest populations. Even more so for developing countries; cryptocurrencies can help countries escape poverty. Seriously? Yes, yes, read the article to the end to form your own opinion.

Hyperinflation, poverty, lack of jobs, lack of access to banks, lack of capital and insufficient access to markets are some of the problems that developing countries face. It is even these problems that are often at the origin of poverty. Thus, cryptocurrencies can help people in developing countries “easily” solve these problems.

These objectives will be achieved more quickly by giving everyone access to modern banking and financial services thanks to blockchain.

Many entrepreneurs, economists, heads of development institutes and businessmen now believe that a combination of cryptocurrency with the use of smartphones is the economic opportunity that must be seized today.

How can cryptocurrencies emancipate African countries? This is therefore the question that we will address here.

1/ Facilitate access to micro-credit in cryptocurrency

Blockchain startups are also very interested in blockchain. For example, they strengthen the fintechs already in place. Some offer banking services, but this time in cryptocurrency. In Asia, a company specializes in bank loans to the most deprived: MicroMoney claims to have taken out 40 loans in Myanmar (Burma), Cambodia, Thailand, Indonesia and Sri Lanka through its blockchain-based system. The system also includes a phone application available on Google Play.

MicroMoney's goal is to make hard-to-obtain banking services, such as loans, available to the world's 2,5 billion unbanked people. So, a borrower can borrow money in just under 15 minutes. It is possible to borrow for periods of 1 week to 1 month. And, the funds lent are more microcredit. This is then a superb opportunity for unbanked people. We must still remember that funds are needed to start a business, for example, and the fact that there is no financing can prevent any initiative. This shows you how important companies like microMoney are. We should even encourage this type of society.

MicroMoney is one of the rare companies that followed the roadmap of its ICO which was very conclusive. Likewise, success in Asia led it to also open a subsidiary in Africa: https://www.micromoneyafrica.com.

2/ Increase financial inclusion

In the same vein as MicroMoney, Nebeus defines itself as a crypto-bank. Nebeus offers all the services of a real bank: an online and smartphone wallet (wallet), a crypto exchange platform for fiat, a cryptocurrency bank card and also money loans. Nebeus is therefore a completely complete banking entity. It is projects like this that we must encourage across all countries where financial inclusion is lacking.

Thus, in African countries tolerant of cryptocurrencies and blockchain projects (Ghana, South Africa, Rwanda…English-speaking African countries), it is possible to subscribe to Nebeus. To put it bluntly, in terms of financial inclusion, Nebeus is just awesome. Allowing everyone to have a crypto bank account without documents and administrative procedures is already an achievement. Opening up credit to the most deprived populations is still great. In short, as you have understood, it is projects like crypto banks that advance the banking process and therefore, financing. This therefore allows entrepreneurs to benefit from capital quickly for their entrepreneurial projects, for example.

3/ Improve the transfer of money from Europe to Africa

Money transfers have often been the priority for fintech startups. Indeed, millions of dollars are sent from the diaspora to countries of origin. Traditional money transfer services like Western Union charge relatively high fees (up to 20%) and the procedures are complex. In fact, you have to go to an agency, fill out forms, etc. to send money.

With cryptocurrencies, this can greatly facilitate money transfers. This is for example the case of BitPesa which is on the same path to success as M-Pesa. BitPesa is designed to help importers in Kenya, Nigeria, Tanzania and Uganda receive payments or send money to Europe, the United States and even China. There, this makes it possible to facilitate international trade thanks to the easier sending of money.

BitPesa claims to have 6 users in over 000 countries. It also claims that these users have made more than 85 transactions through its blockchain.

The hope is to encourage entrepreneurship by allowing businesspeople to receive payments in multiple currencies. BitPesa is trying to eliminate one of the biggest barriers to entrepreneurship in developing countries which is the lack of access to international payment services.

Another advantage of systems such as BitPesa is that they send money directly to people in developing countries. Thus, this can be a good boost for the economic growth of the continent. This can limit development aid which has proven to be limited if not ineffective.

Solutions like BitPesa make it possible to send money directly to local people who will spend it in their local communities for local businesses. Long-term benefits may include job creation and raising the country's trade revenue.

A Nigerian in London who wants to send money to his mother back home may have to visit a money transfer store. There he has to pay several pounds for a transfer. To receive it, her mother may have to walk to a wire transfer store and pick up the money in cash. Both money transfer stores; and the network that connects them, will charge fees for the transfer, which may increase the price.

Besides, some African cryptocurrencies like “Afro” also have this ambition to reduce money transfer costs.

4/ Help refugees and NGOs

Even the United Nations World Food Program is using cryptocurrency to help countries most in need. Moreover, other NGOs are following this path as cryptocurrencies are proving effective. The program began using Ethereum to send funds to 10 refugees in Jordan in May 000, Market Mad House reported.

The program's financial manager hopes to use the Ethereum cryptocurrency to send payments to 500 refugees in 000. The first Ether payments were made in the form of vouchers, but the UN plans to start making direct payments via crypto -currency in the future.

The UN is experimenting with Ethereum because it can be sent via simple applications on mobile phones. Many of today's refugees have cell phones but no access to banks. Setting up a cell phone carrier could be cheaper and faster than traditional relief efforts. Likewise, Ethereum is also used to pay local vendors who provide services and supplies to United Nations programs.

5/ Cryptocurrencies to overcome inflation

Cryptocurrency can solve one of the most difficult problems facing people in some developing countries: inflation. In some countries, the country is poor because their currency is worthless. For the detractors of the CFA Franc, this is also the problem with such a currency beyond the problem of the symbolism that it poses. In the traditional system, governments can create money by printing money. This is also the case for many countries which decide to print money to deal with the financial crisis. History has shown us that this is not the right method…

This is the case in Venezuela. which suffers from hyperinflation under the Maduro regime; The Bolivar loses its value drastically and buying a Big Mac at McDonald's can cost up to an average salary.

Venezuela's inflation rate reached 500% in December 2017, Bloomberg reported. Other data indicates that inflation in Venezuela could reach 4% by 000.

Thousands of Venezuelans have found a way to escape hyperinflation by mining bitcoin or other cryptocurrencies themselves, according to The Atlantic newspaper. Venezuelans are simply using their country's cheap electricity to mine crypto. In return, they get a currency that increases in value while the Bolivar collapses.

The best Bitcoin miners can earn around $500 per month, which is a fortune in Venezuela. That's enough money to feed a family of four and buy basic supplies like diapers and medicine. Most importantly, Venezuelans can purchase items they need online with Bitcoin or purchase Amazon gift cards to purchase the supplies they need.

Unsurprisingly, all kinds of people, including politicians, police officers and university professors, have started mining cryptocurrencies. Not even a police crackdown could stop Bitcoin and Ethereum mining in Venezuela. The extraction ofEthereum is gaining ground in Venezuela because it is easier; and does not require special computers, as required by Bitcoin for example.

Some economists now believe that cryptocurrency mining is the only way to sustain the Venezuelan economy.

6/ Cryptocurrencies to replace fragile financial systems

Another use of cryptocurrency in countries plagued by inflation remains savings. Around 37% of Golix (formerly BitFinance) users in Zimbabwe use their Bitcoin holdings as a savings account, Quartz reported. Golix is ​​a cryptocurrency exchange platform in Africa.

Bitcoin is used to save money because it is much less vulnerable to inflation than the Zimbabwean dollar. Few people in Zimbabwe trust their country's paper currency as the country experienced a huge inflation of $500 billion in 2009.

This led to the collapse of Zimbabwe's financial system. This is certainly what makes the population very open to cryptocurrencies. Even if the government is not for its use, the people no longer trust this government currency which can collapse overnight. To conclude, for example, here, cryptocurrencies could participate in the development of Africa from a macroeconomic policy point of view and even from the financial structure.

7/ Circumvent the omnipresence of banks

Here, this is not specific to Africa or developing countries, but this is the advantage of cryptocurrencies in the economy from a global point of view.

Cryptocurrencies make remittances serve the people rather than the banks

Using systems such as Coins.ph, it is possible to send funds to loved ones with the press of a button. The person who receives also receives it directly. No more intermediaries, no more commissions, no more paper and less waste of time.

It is now possible to send cryptocurrencies to a recipient's address. It's that simple. It is this monetary exchange that will contribute to development in Africa.

Most companies claim the fees are 86% lower than wire transfer fees. This can give people who rely on remittances an instant boost in income, eliminating the high fees of traditional companies.

Cryptocurrencies can help remittance users by helping them keep more of their money. Remittances often lose much of their value when they are converted from a more valuable developed country currency to a less valuable local currency. So here again, development in Africa will involve the reduction of costs and the absence of exchange between different currencies.

Funds left in cryptocurrency will not lose their values ​​as much. We can even hope that most cryptocurrencies will increase in value in the years to come. Another advantage that cryptocurrency can give to residents of developing countries is that it can be stored in digital accounts on the cloud, accessible with phones. This means they won't have to rely on cash that can be stolen, lost or destroyed. Likewise, that they will not have to travel to make or receive payments. It is in this sense that we speak of participating in the development of Africa.

What economists think

Local traders and activists Nigeria and South Africa believe that cryptocurrencies can democratize the economy by giving the average population access to different financing, according to Lorenzo Fioramonti of the University of Pretoria. Fioramonti is a renowned economist who believes in economics without growth and social cohesion. He became interested in cryptocurrency when he discovered his students in South Africa were using it.

Fioramonti believes that cryptocurrency and other technologies are transforming monetary systems from centralized to decentralized systems. In a centralized system, money is routed through a central clearing house, such as a central bank or a payment processor such as MasterCard.

Decentralized networks are peer-to-peer, meaning money passes directly from one person to another. This makes it easier for average citizens to circumvent government controls and for officials to steal or seize money. This is therefore the main innovation that must be cultivated and used.

Fioramonti believes there will be a wide variety of currencies in the future; And that cryptocurrencies will be just one of many means of exchange available to people in developing countries. He also believes that peer-to-peer exchange solutions such as cryptocurrency will lead to a better and more open economy in developing countries. It is concretely for him, undeniable that bitcoin contributes to the development of Africa and developing countries.

Reducing the poor population in the 21st century

All of this points to what could be cryptocurrency's biggest and most disruptive effect. A large part of the world's poor population can enter the 21st century by allowing them to participate in the global economy.

Through cryptocurrency, hundreds of millions of people can save money, earn interest, invest, start a business, borrow money, receive funds or send money to friends and family for the first time. This will have enormous effects and can generate millions of new businesses and new wealth, thanks to cryptocurrencies and blockchain. This is how it will propel development in Africa, it seems obvious, shall we say.

This is also where some people think that governments should not be reluctant because it is a golden opportunity to increase development in Africa...