Sending money to and from Africa has been on a steady rise. This is because a vast number of Africans have migrated to the West and routinely need to send money back home to their families.
In 2019, remittances to Sub-Saharan Africa were pegged at $550 billion. This figure declined during the pandemic and picked up after that. Anyone who has had to wire funds to their families back home or remote employees will agree remittance comes with challenges including high transaction fees, slow pace, and regulatory constraints.
With the development of cryptocurrencies, there has been so much positivity that adoption will potentially address the challenges of transferring money to and across Africa.
Let’s explore three ways crypto adoption will enhance remittance to and across Africa.
Traditional cross-border transfers can take several days to process, while cryptocurrencies enable near-instantaneous transactions. This speed can be beneficial, particularly for urgent financial needs.
Many individuals in Africa do not have access to traditional banking services. Crypto wallets can be created and accessed with just a smartphone and an internet connection, making it easier for people to participate in financial transactions and access basic financial services.
Traditional money transfer methods, such as remittance services, often involve high fees that can be burdensome for individuals sending money to and across Africa. Crypto transactions can potentially reduce these costs by eliminating intermediaries and associated fees.
Africa has a significant unbanked population, meaning many people lack access to formal banking services. Crypto adoption can offer financial inclusion opportunities by allowing individuals to participate in the global economy without the need for a traditional bank account. This could empower individuals and businesses to access financial services, save money, and engage in economic activities more easily.
However, to have the desired crypto adoption on the continent, the following challenges need to be addressed:
In conclusion, while crypto adoption has the potential to address major money transfer challenges in Africa, challenges related to infrastructure, regulation, and education need to be addressed to maximize its benefits.
