Whatever you like to call it — encryption, blockchain, or Web3 — this new frontier of the digital economy is booming in Africa. If you've been falling asleep, now is the time to wake up.
Why? First, the value of the African cryptocurrency market increased by more than 1,200% from July 2020 to June 2021, according to analytics firm Chainalysis. Kenya, South Africa, Nigeria, and Tanzania have seen particularly high rates of cryptocurrency adoption during this period, and Africa has the third-fastest-growing cryptocurrency economy in the world. That's not all. Chainalysis also found that Africa leads the world in terms of share of total peer-to-peer crypto transactions. This suggests that African consumers are increasingly finding solutions to explicit or implicit bans in crypto-unfriendly jurisdictions.
With the overall growth of cryptocurrency transactions and transfers across Africa, activity from blockchain networks/protocols, venture capital firms, grant funders, governments, etc. has accelerated across the continent over the past 12 months.
It seems like every day now, leading blockchain networks are announcing new Africa-focused initiatives. In the past 12 months alone, Ethereum, Cardano, Stellar, Celo, and others appear to be aggressively vying for a place in Africa's emerging Web3 economy.
The Ethereum Foundation has pledged resources to an insurance program for more than 6 million farmers in Kenya.
The Stellar Development Foundation announced several initiatives, including launching a new Europe-Africa remittance corridor in partnership with African unicorn Flutterwave, investing in a remittance platform in Nigeria, offering a blockchain bootcamp for African startups, and a $30 million A matching fund, which has invested in Afriex. It's an Africa-focused company with users across Nigeria, Ghana, Kenya, and Uganda.
The Celo Foundation has announced initiatives of its own, such as a partnership with a Burkinabe start-up to launch a stablecoin that tracks the value of the CFA franc, and a pilot in Kenya with Mercy Corps Ventures to drive adoption among gig workers. financial inclusion. As part of the Wave IV grant program, the company provided free equity funding to several African projects, supporting various early-stage African companies through the Celoccamp boot camp. Also, in the Founder in Residence program, Africa-focused founders make up 40% of the first cohort of founders.
Cardano is also busy across the continent. Cardano CEO Charles Hoskinson has completed an African tour from South Africa to Egypt, outlining Cardano's vision for Africa. Cardano established EMURGO Africa, a business unit focused on Africa in Kenya, and plans to invest $100 million in more than 100 blockchain startups within three years. EMURGO Africa announced investments in Adanian Labs and Adaverse, and Cardano announced a partnership with Kenya’s Pezesha to build a “peer-to-peer financial operating system.”
In addition to increased blockchain protocol activity, funding has grown over the past 12 months as startups leverage various blockchain protocols to help individuals, businesses, and other entities participate in the Web3 economy.
On/off-ramps (fiat and cryptocurrency swaps) that bridge the gap between the traditional economy and the emerging Web3 economy are one of the areas attracting investors' attention. Fonbnk raised an oversubscribed seed round to build the easiest way for millions of Africans to access digital assets — using only prepaid airtime. Canza Finance, powered by a network of brick-and-mortar agents, also recently raised funding.
Exchanges and wallets that allow users to buy and sell cryptocurrencies have also increased funding over the past 12 months. Examples include VALR ($50M Series B), Cowrie Exchange, Yellow Card, VIBRA (Blockchain Labs in Africa), Busha, OVEX, Ejara, Bitmama, and Revix.
Infrastructure providers that make it easy for others to build crypto products are also attracting investor attention. These include LazerPay, KotaniPay, paycourse, Flux, Emtech, and more.
Similarly, blockchain services leveraging blockchain technology in various use cases have also received their fair share of venture capital funding over the past 12 months. Examples here include fundraising by Pravica, HouseAfrica, KappaPay, SunExchange, Chekkit, OneWattSolar, Seso Global and others.
Lending-related services aren’t left out either by Goldfinch, NFTfi, and others that have also raised venture capital over the past year.
Finally, studios, super apps, and other platforms with broad Web3 missions have also caught the eye of global investors over the past 12 months. Fundraising campaigns by Nestcoin, Africa Blockchain Center and Jambo are prime examples.
In addition to the above-mentioned Web3-focused companies, a number of startups in other fields have also announced that they intend to use recent financing to deploy or explore Web3-related projects. For example, the CEO of African mobile game publisher Carry1st said that "game content is [beginning] to integrate more and more with NFTs and cryptocurrencies," and revealed that the company will use some of the funds from a recent funding round to explore Web3 P2E games.
Another example is African fintech unicorn Chipper Cash, which recently closed a major funding round with global cryptocurrency derivatives exchange FTX as a lead investor. Part of FTX’s goal in investing in Chipper Cash is to “accelerate the adoption of cryptocurrencies in Africa and beyond,” said FTX CEO Samuel Bankman-Fried.
Based on the funding activity mentioned above, coupled with broader market trends, it is clear that exciting times are ahead for Web3 founders and funders across the continent.
But blockchain networks and venture capital investors are not the only groups drawn to the opportunity to shape Africa's nascent Web3 economy. Many NGOs are also keen to explore the opportunities Web3 offers to impact the continent.
For example, non-profit humanitarian organization Mercy Corps recently launched a $1 million Crypto For Good fund to support blockchain-based projects promoting financial inclusion in Africa and other emerging markets. Likewise, the UNICEF Innovation Fund, a financial institution focused on bringing technology to the world's next billion users, is investing up to $100,000 in startups in Africa (and other UNICEF program countries) Stockless Cryptocurrency Investing - These startups develop blockchain-based solutions that "have the potential to benefit humanity."
Even former Twitter CEO Jack Dorsey and global rap superstar Jay-Z have joined the ranks in the past 12 months. They established the Bitcoin Trust, a 500 Bitcoin (BTC) vehicle, and appointed four Africans to its board of directors to help determine how the fund will be managed — which, presumably, will include important areas of focus.
In addition to grant funding, various other indicators point to the traction of Web3 across the continent. For example, Quidax became the first African cryptocurrency exchange to list on CoinMarketCap, CMC is arguably the leading authority on global cryptocurrency data. Additionally, in addition to its investment in Chipper Cash, cryptocurrency derivatives exchange FTX has announced a partnership with AZA Finance to build an infrastructure connecting African markets and the global Web3 economy.
While the potential influence of corporate partners, NGOs, VC capital, and blockchain protocols cannot be underestimated, governments remain an important player that can stimulate or hinder the rise of African Web3 economies. So far, however, African governments seem to be generally taking a properly skeptical view of cryptocurrencies.
The Nigerian government is an example. In February 2021, the country’s central bank sent out a memo, an act that caused considerable confusion in the country and undoubtedly diverted users from official cryptocurrency exchanges to peer-to-peer trading, stating:
Regulated financial institutions under its jurisdiction are "prohibited from conducting cryptocurrency transactions or providing payment support for cryptocurrency exchanges." The Central Bank of Nigeria further directed financial institutions to “identify individuals and/or entities that conduct transactions using [cryptocurrencies]…and ensure that such accounts are closed immediately.”
Nigeria is not the only country skeptical of cryptocurrencies. In fact, according to the US Library of Congress, as of November 2021, about half of the countries in Africa have explicitly banned cryptocurrencies.
It is worth mentioning here the words of Bitange Ndemo, Professor of Entrepreneurship at the University of Nairobi:
“Blockchain technologies are the wave of the future, and any effort to ban them — or even overly interfere with their operation — will suffer the same fate as other countries attempting to restrict their behavior.”
However, despite the somewhat hostile, or at least skeptical, attitude towards cryptocurrency trading and ownership in many countries on the continent, a growing number of governments are increasingly skeptical of other applications of blockchain technology, particularly central bank digital currencies (CBDCs). Be more open minded.
Nigeria launched e-naira in October 2021, South Africa is participating in the BIS multi-CBDC experiment Project Dunbar, Morocco, Tunisia, Ghana, Kenya, Rwanda, Madagascar, Mauritius and most recently Uganda are backed by their respective central banks Actively research digital currency.
As more and more governments on the continent explore blockchain-based solutions, even if only limited to CBDCs, one view is that they will increasingly likely develop a smarter approach to the Web3 economy, and more A policy framework that meets the needs of everyday users. While that remains to be seen, such optimism is welcome.
The new Web3 economy is gestating countless opportunities around the world, and the impact on the African continent is enormous. Our mission is to leverage the latest blockchain technology to deliver real value to the billions of unbanked and underserved individuals in Africa and other emerging markets. We’re excited to see various blockchain protocols, startups, investors, grant funders, and governments interested in doing the same. Given the current situation and the pace of innovation across the continent, it is clear that the future of Web3 in Africa is bright.
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