While cryptocurrency is gaining popularity with users around the world, several governments are still considering whether to legalize it. Countries in Africa, however, seem to be warming to the idea of digital currencies, with the Central African Republic adopting Bitcoin as its official currency late last month. This made it the second country in the world and the first in Africa to do so. The only other country that uses Bitcoin as legal tender is El Salvador. Following the lead of the Central African Republic, Uganda is now also considering the idea of a “digital central bank currency”, indicating a steadily growing interest in cryptocurrency on the continent.
Speaking of Uganda’s interest in cryptocurrency, Andrew Kawere, director of the Bank of Uganda for national payments, told Reuters that the Bank of Uganda was conducting preliminary research to determine whether a central bank digital currency should be examined and which ones. policy goals it would address.
While Uganda is still toying with the idea, Nigeria’s central bank had banned local banks from working with cryptocurrencies last year. “In addition to previous regulatory guidance on the subject, the Bank would like to remind regulated institutions that trading cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited,” according to a directive issued by the Central Bank of Nigeria in February 2021.
Instead, it launched its own digital currency. In October 2021, Nigeria became the first country in Africa to introduce a digital currency called eNaira. Speaking of the same, Nigerian President Muhammadu Buhari had said in a televised speech that over the next 10 years, the adoption of the central bank’s digital currency and the underlying blockchain technology could increase Nigeria’s gross domestic product by $29 billion.
Data also indicate an increased interest in cryptocurrency in African countries. According to a report by blockchain data platform Chainalysis, the African cryptocurrency market grew by more than 1,200 percent in a year between 2020 and 2021. The report stated that while Africa had a small cryptocurrency economy, with $105.6 billion in cryptocurrency received between July 2020 and June 2021, it was also “one of the most dynamic and exciting”.
In addition, the report also mentioned that some of the largest adoptions in the world are seen in Africa with Kenya, Nigeria, South Africa and Tanzania making the top 20 of our Global Crypto Adoption Index. However, low internet penetration in several African countries may prove to be a roadblock to the widespread adoption of cryptocurrency in parts of the continent.