How crypto is crossing the unbanked gap in Africa #AD

By Yande Nomvete

The number of adults with a bank account in Sub-Saharan Africa has grown significantly since 2011. Today, more than 49% of adults have an account with Kenya (79%), South Africa (85%) and Mauritius (91%) leading the way.

According to the World Bank, mobile money has played a significant role in driving financial inclusion within the region, and the evolution of digital services is furthering this change.

When it comes to reshaping the narrative of inclusion on the continent, a Baker McKenzie report suggests that technologies such as cryptocurrency and blockchain have a role to play in enhancing socio-economic and financial inclusion on the continent. It is a sentiment echoed by MDPI research which highlighted the value that cryptocurrency mechanisms bring to resolving the challenges that currently impact financial inclusion.

These mechanisms are as simple as lowering the barrier to entry through mobile money platforms that are accessible, easy to navigate and already have significant market penetration.

The GSMA mobile connectivity report for the region in 2023 estimated 489 million unique mobile subscribers, 287 million mobile internet users, and increased integration of 4G and 5G capabilities. All of this adds up to easier access to financial services and solutions that meet the needs of a diverse population. Cryptocurrency is one such solution.

The reliance of crypto on blockchain and mobile-based platforms makes it immediately accessible, and far more relevant to many users.

The lack of physical banking branches in rural areas, high account maintenance fees, excessive documentation requirements and overarching distrust in traditional banking systems put a lot of people off moving into the banking sector. They’re unbanked by choice and they want solutions that allow them to share, spend and manage money without having to endure mainstream banking expectations.

Crypto-wallets and mobile-based solutions are creating payment ecosystems that offer users the same rewards and value-added benefits as traditional banking platforms, but with less complexity.

Binance Pay, for example, gives users rewards for paying and getting paid in crypto and it offers far lower transaction fees than traditional transactions. Crypto is also becoming more acceptable as a payment solution – there are 5.8 million users in South Africa alone – and brands such as Pick ‘n Pay, Takealot, and The Tea Merchant let you tap and crypto your purchases.

The growing number of stores that allow for crypto payments, the low transaction costs and the accessibility of crypto are not the only reasons why people are opting into this technology. It also makes cross-border payments less painful and a lot quicker which is, for many people in Africa, a huge selling point.

Small businesses, gig workers, and remote workers rely on cross-border payments to survive, and to send money home, and the onerous requirements made by traditional banking systems have long been a barrier.

Crypto simplifies this process significantly – as long as people are using the same application, payments can travel across borders with ease. Solutions such as Binance Pay, break down geographical barriers that often cause delays and come with high fees.

While there are challenges – regulatory uncertainty, digital finance education and infrastructure issues inhibit comprehensive uptake and can introduce risk. However, the momentum of crypto adoption across the continent is pushing governments to make more supportive regulatory frameworks which, in turn, lays the foundation for increased financial inclusion.

Crypto isn’t just bridging the gap, it’s building a whole new road by tailoring financial services for small businesses and users that want something more than what traditional banking dictates.