Inflation mitigation a key driver for Crypto adoption in Africa

Cryptocurrency is a digital asset, yes, but it’s also a problem solver. In particular, crypto presents a potential solution to the problems of fiat currency devaluation and, in conjunction with that, the price inflation of a broad range of essential goods and services.

Massive populations in the developing world are turning to cryptocurrencies as a means to store value and conduct commerce across borders. The numbers are staggering with the total crypto market cap reaching $3 trillion. This inflow of funds into crypto is shown by the popularity of the largest crypto exchanges. In a 2024 study of top internet services conducted by Cloudflare, cryptocurrency exchange leader, Binance, ranks #6 across all financial services platforms worldwide – only behind the likes of Stripe, Alipay and Paypal.

In a recent interview with Benzinga, Binance CEO Richard Teng commented on his belief that the blockchain and digital assets can be foundational for global economic growth, “Crypto has changed the lives of so many people, especially where banking systems are expensive or inaccessible.” Teng continued by discussing the role of crypto regulation, “Close to one-third of global regulators now have frameworks for crypto. This clarity is critical for mass adoption.”

Cryptocurrency is the global technology sector’s answer as nations and continents seek ways to mitigate the devastating impact of inflation. Among these regions seeking solutions in the 2020s, Africa could benefit greatly from the built-in advantages that Bitcoin and other decentralized digital currencies have to offer.

Limited Supply Is the Key

Unlike the world’s major fiat currencies which governments are able to print and spend, Bitcoin from the outset established a maximum supply of 21 million currency units (Bitcoins). It’s literally written into the code, allegedly authored 15 years ago by the mysterious Satoshi Nakamoto.

Perhaps Nakamoto didn’t specifically have Africa’s inflation problem in mind when he wrote the original code for the Bitcoin blockchain. However price inflation and currency debasement are prevalent in many regions of African today – and cryptocurrency’s inherent supply limitations allow the public access to a devaluation-resistant alternative to government-controlled fiat money.

This isn’t to suggest that all inflation rates throughout the African continent are out of control in 2024/2025. However, data provided by Trading Economics revealed that, in October 2024, the year-over-year inflation rate was 24.9% in Burundi, 29.17% in Angola, 32.4% in Malawi, 33.88% in Nigeria, and 57.5% in Zimbabwe.

Meanwhile, for South Africa, a fourth-quarter 2024 survey conducted by the Bureau for Economic Research (per Reuters) concluded that the “average inflation forecast of analysts, business people and labor unions was for headline consumer inflation of 4.6% in 2024, 4.5% in 2025 and 4.6% in 2026.” These percentages are roughly in line with the South African Reserve Bank’s (SARB’s) 3% to 6% inflation target, the midpoint of which is 4.5%.

Like numerous other central banks, the SARB has implemented consecutive interest rate cuts in order to tamp down inflation. Consequently, while Capital Economics economist Jason Tuvey expects South Africa’s inflation rate to “continue to edge higher over the coming months,” he also believes it is “likely to remain contained and stay below the 4.5% target midpoint” set by the SARB.

Whether Tuvey’s forecast turns out to be true or not, it’s indisputable that Africa has pockets of hyperinflation that must be addressed. Governments only have so many tools to contain upward price pressures – but perhaps cryptocurrency, the “people’s money,” can play a key role in managing Africa’s inflationary issues.

Technology to the Rescue?

Here’s a fact that might surprise you. A cryptocurrency/blockchain report from Chainalysis found that Nigeria was the world’s number-two crypto adopter of 2024 (only surpassed by India).

But then, maybe this shouldn’t be too surprising. Given the aforementioned inflation rate in Nigeria, it makes sense that the people would turn to non-fiat currency for relief.

Moreover, mobile-phone use in Africa is widespread and growing, with many Africans using the Telegram communication app, which is similar to Meta Platforms’ WhatsApp. There’s a cryptocurrency connection here, as according to a FinanceMagnates report, more than 3 million African users are involved with crypto-focused Telegram groups.

Thus, various regions of Africa are ripe for a tech-focused solution to the inflation problem. Sub-Saharan Africa has been particularly amenable to crypto-usage penetration, as Bitcoin’s share of the region’s transaction volume reached an eye-opening 9.3% from July 2022 to June 2023.

And, likely due to the nation’s high inflation rate, Nigeria has become a standout among Africa’s cryptocurrency adopters. Chainalysis has called Nigeria “ground zero for crypto activity in Sub-Saharan Africa,” reporting that “the country received approximately $59 billion in cryptocurrency value between July 2023 and June 2024.”

A Brighter Future for All of Africa

Telegram’s popularity has helped spread the word about Bitcoin, while stablecoin use is spreading throughout Nigeria, Ethiopia, Ghana, and South Africa generally. Clearly, the future of inflation mitigation in the African continent will not happen without technology’s essential tools.

Most importantly, government actions such as interest rate cuts don’t necessarily have to be at odds with tech-enhanced grassroots movements. While national financial authorities use their tools to try to contain inflation rates, adoption rates for Bitcoin, altcoins, and stablecoins will continue to grow and local crypto communities will thrive in the 2020s, hopefully to the benefit of Africans everywhere.