By George Ward
A new study on the use of cryptocurrency in Africa shows that there are an estimated 55.3 million digital asset holders in the region, spread across 33 countries. But only three out of the 33 countries—Nigeria, Kenya, and South Africa account for 36.14 million crypto users.
Africa’s Crypto Trading Hubs
The study found that despite being home to multiple crypto exchanges, Seychelles has only 1,000 crypto holders compared to the African countries used in the research.
Furthermore, the survey conducted by the Moroccan Policy Center for the New South (PCNS), a think-tank platform, indicates that Nigeria has the most significant number of crypto holders on the continent, with 40.5%.
Similarly, the study suggests that South Africa is the second-highest-ranked country, with approximately 7.71 million cryptocurrency users. Kenya comes third with an estimated 6 million holders of digital assets among the 33 countries in Africa.
Apart from having the highest number of digital asset owners in Africa, the three countries are also the only ones with a percentage of holders relative to their population, which is over 10%.
However, using this metric to measure the three countries, South Africa, with a proportion of crypto owners of 12.27%, comes first, followed by Kenya with 11.85%. Nigeria, Africa’s most populous nation, comes in third with 10.33%.
Economic Factors Fuel Rising Crypto Use
The PCNS study for the rest of the surveyed countries shows that the fraction of crypto users is between one and five percent. Ghana has 4.3%, and Togo has 4.22% as the leading state in this category, with Cape Verde having 1% as the lowest.
Meanwhile, Seychelles, with its multitude of digital asset service providers like Huobi Global and KuCoin, has a proportion of crypto holders relative to its population of 1.33%.
Moreover, the PCNS researchers state that “the discovery did not happen by chance, as other factors like demography, urbanization, and economic variables played a part in the rising rate of crypto use in Africa. Other factors have to do with the technology used in cryptocurrency, like how the transfer of huge funds is made with low costs compared to the traditional financial system.”
However, some jurisdictions, like Nigeria, have officially banned crypto trading, but the activities persist.
Why Africa Needs A Regulated Crypto Market
The crash of the FTX crypto exchange last month and the subsequent downturn in the broader crypto market again further exposed the need for comprehensive regulation of the industry.
In a November 24 blog post, the International Monetary Fund (IMF) sees Africa as the next crypto hub, which requires urgent action to stop bad actors from taking advantage of the unsuspecting residents.
The IMF report further noted that only a quarter of African nations have a regulated crypto framework. The global financial body stressed that in the absence of guidelines, the region risked being plunged into a financial crisis through cryptocurrency.