Despite the global crash in cryptocurrencies, sustained uptake of innovations in non-fungible tokens (NFTs), decentralised finance (DeFi), Web 3.0 and the aetaverse in Africa is convincing investors that early adopters of these technologies are well positioned to benefit from the next phase of crypto expansion.
This was revealed during a discussion between Simon Dingle, CEO of Inves Capital, and Steven Sidley, head: blockchain and cryptoverse research group at the University of Johannesburg’s Institute for Future Knowledge) at the recent Crypto Fest 2022.
In his opening address, Alderman James Vos, mayoral committee member for economic growth in the City of Cape Town, commented: “Cryptocurrencies are exploding in Africa with the World Economic Forum noting that, between July 2020 and June 2021, Africans received $105,6-billion worth of cryptocurrency payments – an increase of 1 200% from the year before. That’s because people across the continent are increasingly finding that cryptocurrency is more accessible than traditional currencies.”
Mandla Magagula, chief technology officer of Libex, gave insight into the driving forces and conditions needed for greater crypto adoption in South Africa.
“In our country and further afield, there is growing evidence of the need to account for key African challenges, which may inhibit the continued growth of cryptocurrencies across the continent. This includes issues such as energy security, unequal access to the internet, and limited spending power of consumers.
“Overcoming these challenges depends on the ability of solutions to meet the needs of the communities they intend to serve, and to meet them at their level. Among other things, this means that they must cater to offline use, as not all consumers can afford to be always-on; they must be optimised for low-end devices which are more prevalent in African markets; and they must be built in a way that prioritises intuition and affordability.”
Nolu Mashologu, business development at FTX Africa, shared that meeting African consumers at the community level was the foundational principle that the crypto-exchange takes when scaling to the African continent. She described to audience members how the platform prioritises a “user-first approach”, which accounted for varying levels of consumer awareness and education, and the need to curate a seamless experience to retain consumer interest.
On the future of DeFi in Africa, Michael Jordan, business development for Polygon Enterprise, explained that: “Africa is set to be the largest market globally, and to ensure sustainable and inclusive socio-economic growth, we need solutions that empower producers and consumers to do business and to do so with a high level of trust. This is where blockchain and DeFi come in.
“The technology is a new and improved method for authenticating finance and proving ownership. In doing so, it reduces fraud, promotes legitimacy, and removes critical inefficiencies. At the end of the day, they set the stage for a better environment in which to trade and transact – a stage which benefits all industries.”
However, to achieve this, local expert on regulating disruptive innovation in the crypto market, audit partner and digital asset lead for Mazars South Africa Wiehann Olivier stressed the need for the national government and the South African Revenue Service (SARS) to implement a regulatory framework, to promote consumer protection, combat fraud, and ultimately support greater adoption.
With many legacy businesses in South Africa now accepting cryptocurrencies as valid forms of payment, Olivier explained that, by establishing proactive and enabling regulations, South Africa could leverage the growing number of crypto transactions and deals, to fuel additional tax revenue for the state and fund public investment initiatives.