Crypto currency adoption in Africa is growing rapidly, with the six countries from the continent among the top 20 countries according to a recent report. The recent reportseeks to provide an objective measure of which countries have the highest levels of cryptocurrency adoption while looking at professional and institutional cryptocurrency adoption as well as adoption by ordinary people.
The report, which ranked all 154 countries, shows that Kenya leads Africa in crypto adoption and ranked five in the world ahead of some of the developed countries like United States, China, Russia and South Africa. The only counties ranked ahead of Kenya in overall crypto adoption are Vietnam, India, Pakistan and Ukraine which topped the ranking in that order.
Africa received $105.6 billion worth of cryptocurrency between July 2020 and June 2021, but despite that it’s one of the fastest growing regions with the crypto market posting a growth of over 1200% by value received in 2020.
Peer-to-peer (P2P) Crypto trading in Africa
Additionally, Kenya is ranked number one when it comes to to peer-to-peer (P2P) cryptocurrency transaction volumes. P2P trading is the act of buying and selling cryptocurrencies directly between users, without a third party or intermediary.
The 2021 Global Crypto Adoption Index by Chainalysis shows that P2P trade volume makes up a significant percentage of all cryptocurrency activity, especially in frontier and emerging markets.
The most common use cases in Kenya and most of the emerging economies was to preserve their savings as well as carry out international transactions, either for individual remittances or for commercial use cases, such as purchasing goods to import and sell.
Statistics also show that Africa has a bigger share of its overall transaction volume made up of retail-sized transfers than any other region at just over 7%, versus the global average of 5.5%
Cross-border transactions in Africa also make up a bigger share of the continent’s cryptocurrency market than any other region at 96% of all transaction volume, versus 78% for all regions combined. Most of the P2P transactions were conducted on Local Bitcoins and Paxful — the world’s two leading P2P exchanges by transaction volume over the last five years.
Why the growth of P2P Crypto in Kenya and Nigeria
P2P exchanges, are non-custodial, meaning, they provide a wallet that puts the users in full control of their cryptocurrency holdings. Customers can then trade cash for cryptocurrency amongst themselves.
The main reason why P2P exchanges are very popular in Kenya and Nigeria is because the countries’ respective Central Banks have made it difficult for customers to send money to cryptocurrency businesses from their bank accounts, either by passing laws or by advising banks not to allow these transfers.
For instance, the Central Bank of Kenya (CBK) has previously issued circulars to Kenyan banks warning them against dealing with cryptocurrencies or transacting with firms dealing with cryptocurrencies.
Safaricom, the largest provider of mobile money gateway services Mpesa, has severally denied services to any company dealing in virtual currencies.
In Nigeria, the country’s Central Bank (CBN) has recently banned all commercial banks and financial institutions from providing account services to crypto exchanges in the country. As part of the ban, the bank issued a directive that all commercial banks close accounts belonging to crypto exchanges as well as other businesses transacting in cryptocurrencies in Nigeria.
In most of these two countries, a big chunk of the P2P activity is happening over informal group chats on messaging apps such as Whatsapp and Telegram.