Industry leaders in Africa discussed how Bitcoin may possibly alter the continent’s financial infrastructure during the first-ever Africa Bitcoin Conference in Accra. The purpose is to give critical tools to unbanked communities dealing with difficulties such as currency volatility, reliance on remittances, and economic sanctions.
Kenyan President William Ruto proposed a fresh idea in light of the US currency problem. The proposal seeks to address the fuel scarcity caused by oil cartels stockpiling US dollars by allowing Kenya to purchase oil using its own shilling currency. Ruto accused the cartels of aggravating the US currency issue, causing Kenya to face gasoline shortages.
As a result, his government put in place steps to alleviate the lack of US dollars. They include allowing Kenyans to purchase gasoline on a six-month credit and signing contracts with Saudi Arabia and UAE firms to supply diesel, petrol, and jet fuel on credit.
Saudi Aramco, Abu Dhabi National Oil Company, and Emirates National Oil Company are involved in these accords, which are supported by government-to-government agreements, and supply fossil fuels to Kenya. This arrangement is intended to relieve strain on foreign currency demand. It also tries to stabilize the Kenya shilling versus the US dollar and other important currencies.
Kenya’s monthly need for fossil fuels is staggering: $500 million. This accounts for a sizable chunk of the country’s total import expense.
Africa’s Digital Alternatives
Due to the scarcity of commercial bank branches in Africa, money transfers can be costly and difficult. Digital banking choices are limited, and concerns like hyperinflation, government corruption, and capital constraints complicate matters further.
Africa’s payment system is primarily reliant on foreign processing, resulting in higher prices and longer processing times.
Mobile money, which is a digital wallet tied to a phone number, has grown rapidly throughout Africa. In 2021, transactions surged by 39% to exceed $700 billion. Nonetheless, customers continue to be denied several typical banking privileges, such as credit and protection against currency volatility.
Bitcoin has the potential to eliminate intermediaries and enable direct digital payments between individuals without the need for credit or multiple fees.
The Lightning Network is a second layer created on top of the main chain of Bitcoin. It lowers transaction costs and allows for speedier payments, making Bitcoin more useful for everyday use.
Yellow Card, Africa’s largest centralized crypto exchange, is investigating the Lightning Network. The idea is to significantly minimize transaction costs and enable international payments between Lightning-enabled Bitcoin wallets.
Innovative projects like Bernard Parah’s collaboration with Strike, a Lightning Network payments platform, show how Bitcoin may be used to allow cross-border transactions without receivers having to engage with cryptocurrencies. People in the United States can use Parah’s “Send Worldwide” service to send money to Nigeria, Ghana, and Kenya.
Kgothatso Ngako, a South African developer, created the “Machankura” custodial Lightning wallet. It enables those who do not have an internet connection to send and receive Bitcoin. The service works with any Lightning wallet worldwide, allowing for rapid transfers even to basic mobile phones in rural places.