The Total Market Size of Crypto in Africa

What is the market size of crypto in Africa, is an often asked question but to answer that question we need to provide some background information.

The payment platform in Africa has seen a large disruption since the rise of various fintech such as Quickteller, Mpesa, and Paga.

In 2013, Nigeria was introduced to the idea of USSD (Unstructured Supplementary Service Data). By 2018 interbank instant payments had grown by over 35% and reached over N261.7 million in instant transfers.

In Kenya mobile money service, Mpesa is now one of the most successful on the continent with operations in over 7 countries. M-Pesa accounted for 655.95 million mobile money transactions in Kenya in the third quarter of 2019. Over the 10 year period, a total of 810.9 million transactions occurred in Kenya

Meanwhile, in South Africa, digital banking is the order of the day. Banks such as Tyme bank have seen massive growth in their user base in just a short amount of time.

These figures prove that people in Africa are receptive to newer and easier methods to do business provided it works efficiently and makes their lives easier to use.

The worldwide daily trading volume of cryptocurrency according to Coinmarketcap and at the time of this writing is at $85 Billion Dollars this covers transactions done only on exchanges.

In Africa according to aggregation of data published on Coinmarketcap, interview with experts in the space and independent analysis. The daily trading volume of cryptocurrency in Africa is estimated to be between $1.4 Billion – $1.6 Billion. 

So why not crypto?

As of 2018, Asia Pacific (APAC) held 59% of the cryptocurrency market, owing to the fact that Japan adopted bitcoin early. While amongst cryptocurrency Bitcoin dominance as a share of the market size as of the time of this writing was 62.6%

Nigeria, Kenya, Uganda, South Africa, and Ghana all rank in the top 10 countries when it came to google searches on Bitcoin. This statistic shows a growing interest in cryptocurrency by Africans. 

The continual growth of cryptocurrency in Africa and the world at large is supported by the fact that it makes business easier,  creates an avenue for growth in revenue, increases the transparency of transactions and fewer transaction fees.

Africa is adopting cryptocurrency incredibly well, according to data from CoinMarketCap’s Q1 2020 report on cryptocurrency adoption, Africa had the second-highest adoption of cryptocurrencies worldwide. The continent had a percentage youth growth of 91.47%, owing much to Nigeria’s 210.6% growth in young crypto users.

At 210.6%, Nigerian youth led the rest of the world in percentage growth of cryptocurrency adoption, far ahead of Australia (+158.07%), Spain (+120.71%), Canada (+112.45%), and Mexico (+97.33%) that make up the top five.

Top cryptocurrencies to trade-in Africa

There are quite a number of cryptocurrencies. As of date, there are approximately 1500 cryptocurrencies in circulation. But we are going to focus on the top crypto coins traded in Africa. Here are five of them;

  • Bitcoin (BTC) 
  • Ethereum (ETH) 
  • Litecoin (LTC) 
  • Ripple (xrp)
  • Tether (USDT) 

It is important to note-  the prices of these cryptocurrencies are subject to rapid change seeing as they are volatile. 

Top cryptocurrency trading countries in Africa

According to a data report (see slide 224), a research company showed that out of all the countries in Africa, South Africa has the highest number of people who own cryptocurrency.

When considering the percentage of internet users who report owning any type of cryptocurrency South Africa leads the list followed by Nigeria, Ghana, Egypt, and Kenya with 10%, 7.8%, 3.6%, and 2.6% respectively.

What is driving cryptocurrency adoption?

For most people to be able to access cryptocurrency and cryptocurrency payment gateways they require internet access. The average region in the world has 48% internet usage while Africa has 22%. An increase in connectivity gives more and more people access to online resources such as cryptocurrency. 

When we think of how the use of the internet has helped push cryptocurrency adoption we think about smartphones and mobile internet. The purchase of smartphones is directly related to the adoption of cryptocurrency in Africa.  The easiest way to access the internet is through a smartphone. This mobile industry connects up to 3.5 billion people to the internet in Africa. 

That being said the increase in smartphone purchases would positively impact cryptocurrency adoption. The market for cryptocurrency in Africa is as there is no open monopoly in the market so there is room for growth for popular and local cryptocurrencies.

Remittance and mobile money providers are also a product of internet connectivity. Africans in diaspora remit money back to home countries than most other continents. Remitting stands at up to 10% as of now. Some countries have a remittance so high it accounts for up to 20% of their GDP. This is the case in countries such as Libya and Gambia.

Cross border remittance in Africa is so high that the elimination/reduction of remittance fees can see a significant increase in the wealth of the parties involved. For context, cross-border remittances of a $300 payment would cost up to ~$30 in charges while it would cost less than 30 cents if you used a cryptocurrency such as bitcoin to make the payment. 

How do people trade crypto in Africa?

There are a number of ways people trade crypto in Africa and some of the most notable are P2P and crypto exchanges.

Peer to peer exchange (P2P)

Peer-to peer crypto users have increased by up to 225% in Africa, says Ray Youssef, chief executive officer of Paxful. The use of crypto in peer to peer has significantly increased because of the lack of high fees as opposed to using fiat currency. 

Peer to peer transactions makes it easy for people to carry out transactions on a daily basis between customers and businesses. Peer to peer payments is poised to rise over the years due to an increase in exposure of cryptocurrency to the unbanked masses in Africa.

Cryptocurrency exchanges in Africa

The importance of crypto exchanges in Africa cannot be overemphasized. For local communities to be able to seamlessly switch and integrate into a lifestyle where they use crypto on a daily basis there needs to be an exchange platform that understands their needs, problems and how to solve them. 

There are over 44 million active crypto wallets in the world currently. To be able to trade crypto you need to use a crypto exchange or a p2p platform. Cryptocurrency exchanges such as Quidax and Luno are often seen to be more trusted and safer compared to p2p platforms.