The appetite for digital currencies is yet to sour in Africa. There are over 2000 active digital currencies worldwide and more keep being issued. Among the latest and perhaps to watch out for on the continent in 2019 are the AfriUnion Coin (AUC) and the AfriNational Tokens (ANT). Both digital currencies, which Forbes Africa describes as a quest to revolutionise the financial system on the continent, are the brainchild of George Gordon, the Director of Africa Master Blockchain Company. Unlike the majority of current digital currencies, which are based on speculative models, he explained in a December 2018 issue of the online magazine, that the AUC and the ANT are designed for a transactional purpose. If they live up to their billing, they will allow international payments, remittances, foreign direct investment as well as day-to-day transactions at local retail stores and other outlets. “It’s the natural next step for digital finance from mobile banking which most Africans are accustomed to,” he says. Some 535 million people or 50 per cent of the population across Sub-Saharan Africa will be subscribed to a mobile service by 2020, according to GSMA, the global association of mobile operators. This has raised optimism that the mobile phone could provide the platform for more Africans to tap into the cryptocurrency ecosystem. To date, the ecosystem includes Bitcoin, which remains the most popular in Africa, followed by other global brands such as Litecoin, XRP, Dash, Lisk and Monero. Moreover the volatility and the almost comical failure to meet astronomically bullish expectations early last year does not seem to have dulled the appetite for the currencies. At the beginning of 2018 when the Bitcoin was trading at US$20,000, some of the more bullish of the top industry experts were predicting that the Bitcoin would hit $75,000 and reach $100,000 per coin by December 2018. The high optimism has become something of comedy. On 29th December the price of the Bitcoin was going for something between $3,500 and $4,000. Yet the notorious unpredictability of digital currencies is not the whole story; the real story what is driving the apparently irrepressible appetite. Consider that, despite the extreme volatility, the daily volume of both the cryptocurrency market and Bitcoin remain relatively high at $15 billion and $5 billion respectively. Despite the unpredictability, in these impressive figures lies the irony that accentuates the silver lining perpetuating the promise in the technology’s rich pickings. To pundits, therefore, it is not just the likes of the AfriUnion Coin and the AfriNational Tokens that are likely to hit the market and prosper, but the prospects for African governments still unsure of the policy direction appear good as some of them ponder whether to issue their own digital offerings. A briefing note last August by Ecobank analysing “African crypto regulation” presents the lay of the cryptocurrency landscape as perceived by governments in the continent. Of the 39 countries in the analysis, so far only two—South Africa and Swaziland—have a favourable or permissive stance on digital money while only Namibia has banned cryptocurrencies outright. On the other hand, Senegal and Tunisia are the earliest national adopters of the digital currency. Tunisia became the first country in the world in 2015 to issue a blockchain-based national currency called eDinar — also known as Digicash and BitDinar. Senegal issued its blockchain-based eCFA — named after CFA franc, the regular Senegalese currency — in December 2016. According to the analysis, countries in the East African Community among most other on the continent are categorised as holding “a contentious stance, but with signs that the situation is being continually monitored.” Rwanda is described under the category of countries exhibiting “indications of research into the potential of cryptocurrencies, accompanied with a warning.” On the whole, the report observes that “African governments and central banks are mostly adopting a ‘wait and see’ approach when it comes to regulating cryptocurrencies.” African countries appear to be looking to their neighbours to regulate and innovate first, and learn from their mistakes, the report suggests. Initially, one of the biggest reasons Bitcoin and other cryptocurrencies were incredibly appealing was the perception of their inherent resistance to regulation and government interference. It is now passé that regulation is not only imperative, but prudent in the face of the technology’s unintended effect to offer a safe haven for money laundering, terrorist financing, tax evasion and fraud. This may yet be the year African governments make up their mind on the policy direction to take. What is certain is it’s now passé that regulation is not only imperative, but prudent in the face of the technology’s unintended effect to offer a safe haven for money laundering, terrorist financing, tax evasion and fraud. As to whether 2019 will turn out to be prosperous for the punters, let’s wait and see. Happy New Year. Twitter: @gituram The views expressed in this article are of the author.
