Over the last decade, payment services in Africa have grown in leaps and bounds. From the rise of mobile money services like Safaricom's M-PESA and MTN's MoMo in East Africa to fintechs like Interswitch and Flutterwave addressing interstate remittance, financial inclusion is on the rise in Africa.
According to Mastercard, the rate of financial inclusion in sub-Saharan Africa in 2011 was 23% but with a combination of fintechs, traditional banking, and mobile money, this rate grew to 43% by 2017. By 2021, the rate was calculated to have grown up to 50% with some experts going as high as 60%.
This growth is largely brought on by the investment boom in Africa which saw a number of financial technology (Fintech) startups getting funded. Raising over $3 billion in the last 5 years, there are over 573 fintechs helping Africans access the global trade economy by providing a variety of payments services ranging from providing point-of-sale (POS) services to transfers, loans, and even insurance.
Even with financial inclusion on the continent at an all-time high, there are still a number of problems Africans face when it comes to payments, one of which is cross-border payments. It's still quite difficult for Africans to travel within the continent, and access their funds without traversing the financial gymnastics of converting to dollars first, and then converting to local currencies. Nigerians, for example, cannot access funds in their Nigerian bank accounts in Kenya, Ghana, or any other country for that matter. Remote freelance workers, and digital business owners—increasingly rising since the COVID pandemic—often have to resort to services like Western Union, or WorldRemit in order to get paid by foreign buyers.
This is where the next battle of fintech lies, in solving inter-state and cross-border remittance, and Njoku Emmanuel believes that the solution lies in cryptocurrency.
A blockchain developer with 4 years of experience working for web3 companies like MakerDAO, Avarta, and Project Hydro, Njoku believes that crypto adoption will help solve Africa's remittance problem, and he is not far off from the truth. According to Chainanalysis, crypto adoption in Africa grew by 1200% between 2020 and 2021. Even though the continent has the smallest crypto-economy—valued at $105.6 billion, it has the biggest share of overall transaction volume made up of retail-sized transfers at 7.7%, higher than the 5% average of other regions.
Driving this growth is the hyperinflation of local currencies which is rising across many African countries including Nigeria, South Africa, and Zimbabwe. With hyperinflation reducing the value of fiat currencies, Africans are left paying higher prices, while earning significantly less, and many are turning to crypto which insures them against this loss. Buying crypto also helps solve cross-border payments for Africa since the currency is valid anywhere.
"A problem we have in Africa is the interoperability of currencies," says Njoku who has travelled to over 10 countries across 4 continents. "In Europe, you can easily send money from country to country. In the Middle East, you can move from Qatar, and still access your funds in Dubai, or in Saudi Arabia even. The same can't be said for Africa; Kenyans can't spend their shillings in Nigeria, and Nigerians have to find ways to buy cedis if they want to spend in Ghana. With crypto, you don't have this problem. The currency is valid wherever you are, and you can create and innovate around it."
How does Lazerpay work?
This solution is what Njoku's company, Lazerpay, is providing for Africans. Founded in 2021, Lazerpay is a blockchain-powered gateway that allows African businesses and individuals receive payments in cryptocurrency from anywhere in the world.
"Right now," Njoku states, "What we are doing is helping Africans accept payments in crypto, but we have plans for much more. We want to drive financial inclusion and interoperability in Africa. We are building a gateway where Africans will be able to send and receive crypto using their local currencies. For example, a Kenyan buyer can send Ksh to a Ghanaian seller, but the seller receives USDT instead of cedis, all without going to the bank or speaking to a middle man. People will be able to send USDT through their local currencies, and Lazerpay's role will be converting the local currency to crypto—USDT—so everyone can hold the real value of their monies."
A rising barrier to crypto adoption on the continent—and globally—is the overregulation of the sector. To date, over 23 African countries have placed some form of a ban on crypto trading and ownership with Algeria, Egypt, Morocco, and Tunisia enforcing absolute bans. These countries believe that crypto is a threat to financial sovereignty, citing reasons like fraud, tax evasion, and terror financing as reasons for the bans. Only one African country, the Central African Republic, has legalised crypto while many others—about 18—are pursuing the creation of their own digital currencies or central bank digital currencies (CBDCs) as opposed to crypto.
"You can't use the old to fix the old, you have to bring in something new. The problem is that African governments think that crypto is going to kill the old way of things or kill fiat currencies but that's not true. We are not here to kill off the old; in fact, we need the old to build new integrations. Crypto is complementing the old way of banking and finance, and it's high time African governments find a way to address it."
One of the ways Njoku thinks governments can address their concerns about crypto is by legalising and taxing crypto. "India, Portugal, the UK and the US are great examples. Crypto isn't legal there yet but the governments tax it as a way to monitor crypto transactions."
If not for the potential revenues that governments could raise from regulating crypto, Njoku believes another reason—in support of regulating crypto—lies in raising awareness. Crypto adoption is already on the rise, and it won't stop. This also means that crypto fraud is growing on the continent with Chainanalysis stating that Africans have lost at least $320 million to illicit crypto activities, 55% of which consist of scams. "Legalising crypto means licensed firms and companies can provide more awareness and services so people don't get scammed," Njoku states.
Africa's crypto frontier may still be in its early days, but investments, interests, and innovations in the sector are on the rise. At the helm of Lazerpay, Njoku Emmanuel believes that there is more to come for the use of crypto on the continent. "There are still a lot of pertinent payments issues to solve in Africa," he concludes, "and crypto is the one that ensures interoperability and financial inclusion, so that Africans, regardless of the country they're in, can realise and retain the true value of their monies."
Written by Joyce Imiegha, PR and Communication Specialist.