Crypto is Quietly Thriving in Sub-Saharan Africa: Chainalysis Report
Small retail payments in Sub-Saharan Africa are powering exceptional crypto adoption and usage, with the region conducting the world’s highest proportion (80%) of crypto retail payments under $1,000, according to a report by blockchain data firm Chainalysis.
The report also highlights how peer-to-peer transactions are more common in Sub-Saharan Africa than anywhere else in the world. At about 6% of all crypto transaction volume, Africa’s peer-to-peer transactions dwarf those of Central and Southern Asia and Oceania, the region with the second-highest volume in that category.
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Many Africans have integrated crypto into everyday life, the report says. Besides retail transactions, remittances and commercial transactions have also been key drivers for Africa’s high adoption and usage rates.
“Crypto usage is driven by everyday necessity, as opposed to speculation by the already-well off…especially in countries where the values of local fiat currencies are dropping, as we’ve seen in Nigeria and Kenya,” the report states.
What makes Africa different?
At first glance, some of the high-level figures in the Chainalysis report tell the story of a continent with the lowest cryptocurrency transaction volume in the world ($100.6 billion in on-chain volume received between July 2021 and June 2022, according to Chainalysis).
However, as we delve deeper, the report reveals first, a very diverse region with varying usage and adoption rates, and second, a genuine need for crypto.
Africa’s diverse crypto usage and adoption rates
The Chainalysis report links to a Global Crypto Adoption Index (also by Chainalysis) that juxtaposes countries like Burkina Faso and Malawi against other African countries such as Nigeria and Kenya.
Of 146 countries, the index ranked Burkina Faso and Malawi at 133 and 137 respectively, while Nigeria and Kenya were 11 and 19 respectively. This wide range highlights the diversity of crypto usage and adoption across the African continent.
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A genuine need for crypto
Chainalysis contrasts affluent Western countries that use crypto to increase wealth with poorer African countries that use crypto to preserve and build wealth amid unfavorable economic conditions.
“We don’t have big, institutional-level traders in Sub-Saharan Africa,” said Adedeji Owonibi, founder of Nigeria-based blockchain consulting company and product studio Convexity, in an interview with Chainalysis. “The people driving the market here are retail. Nigeria has a ton of highly educated young graduates with high unemployment rates, no jobs available – crypto to them is a rescue. It’s a way to feed their family.”
A market that has crypto integrated into everyday life may present unique opportunities for entrepreneurs and startups. The report explains that retail usage remains consistent or even increases in the face of a bear market.
“The number of small retail transfers actually grew starting at the onset of the bear market in May,” the report states.
It seems startups that can facilitate retail, commercial and peer-to-peer transactions, have a decent shot at success in Africa. According to Chainalysis, Paxful, a popular peer-to-peer exchange, is experiencing remittance user growth rates as high as 55% in Nigeria (Paxful’s biggest market) and 140% in Kenya.