Africans are increasingly turning to cryptocurrencies as a way to exchange local fiat currencies, according to a new report from market research firm Chainalysis.

Company data shows that many local individuals and companies use cryptocurrencies to avoid high fees, regulatory complications and currency volatility.

The number of monthly transfers to and from Africa surpassed 600,000. Total remittances below $ 10,000 in the year through June jumped 55% to $ 316 million. Nigeria, the continent’s largest economy, South Africa and Kenya are leading the way in cryptocurrency transfers.

Abolaji Odunjo, a mobile phone store owner in Lagos, the largest city in Nigeria, has started using bitcoins to pay his Chinese suppliers. He told Reuters that he switched to cryptocurrency for the sake of speed and convenience:

Bitcoin helped protect my business from devaluation while at the same time allowing me to grow.
Odongo added that this method of payment helped him avoid higher taxes and is an alternative to buying an increasingly stronger US dollar. Many African countries are grappling with the devaluation and volatility of the currency, which increases the demand and thus the purchase price of the US dollar. Some currencies, such as the South African rand, have lost more than 50% of their value against the US dollar over the past decade.

Others interviewed for Reuters said that bitcoin payments also help those with family members living abroad in countries like the US and UK send money home.

The average money transfer fee in sub-Saharan Africa is 8.9%, according to the World Bank, while South Africa has the highest fee of 20% per transaction. Bitcoin fees are much lower and usually less than 3%.

The value of cryptocurrencies sent to Africa in 2020 should exceed the total amount sent last year of $ 8 billion, with nearly $ 1 billion sent in June alone. In contrast, the World Bank reported that only $ 48 billion in fiat currencies were sent to sub-Saharan Africa in 2019, with an expected total drop of $ 37 billion this year.

Source: CoinTelegraph