Crypto Adoption in Sub-Saharan Africa Largely Driven by Retail and P2P Activities


While institutional traders are not prevalent in Sub-Saharan Africa, the region is known to have the highest number of small retail transactions globally.

Part of the driving force for cryptocurrency adoption there is fiat currency devaluation, high unemployment rate, and economic instability.

Crypto P2P Thriving in Africa Despite Regulatory Problems

According to a report by blockchain analytics firm Chainalysis, retail users make up the bulk of crypto-related activities in Sub-Saharan. Institutional presence in the region is smaller than the case in other countries.

Retail volume on the continent, though, is largely driven by economic factors such as the need for wealth preservation. This is because the currencies of many of these countries have suffered decades of devaluation against the US dollar.

“Our interviews suggest that this reflects the trend of many young people in Sub-Saharan Africa turning to cryptocurrency as a way to preserve and build wealth in spite of low economic opportunity, as opposed to other countries where we see many using cryptocurrency as a way to multiply their existing wealth,” Chainalysis stated in the blog post.

The near absence of institutional interest in crypto in Sub-Saharan Africa can be attributed to the presence of strict regulatory policies. Nigeria’s central bank, for example, banned commercial lenders from servicing cryptocurrency businesses.

The ban by Nigeria’s central bank also contributed to another adoption metric on the retail side. It triggered an increase in peer-to-peer crypto volumes. According to the report, these P2P transactions are not restricted to platforms like Paxful and Binance that have escrow and intermediary services. Direct crypto P2P deals between buyers and sellers are also happening outside of cryptocurrency exchanges in the region.

Crypto Also Driving Remittance Flows

Remittance is popular in Sub-Saharan Africa due to the high number of the diaspora who send money back home. According to World Bank figures, inflow into Sub-Saharan Africa in 2021 surged 14.1% to nearly $50 billion, after a decline of 8.1% the previous year. However, the high fees charged by mainstream platforms act as an impediment for users. The situation has led people to seek cryptocurrency, as it offers a faster and cheaper alternative.

Fintech payment platforms are also integrating crypto as a way of making cross-border transactions easier. There has been an increase in fintech payment projects across the continent. Fintech startups in Africa raised $3 billion in 2021, according to a report by market analytics firm Briter Bridges. This amounted to 60% of the total capital raised by African tech firms last year.

Cryptocurrency has also been helpful for businesses who import materials as the region sees the emergence of crypto payment corridors between partners in Africa and Asia. These payment corridors often use stablecoins like Tether to facilitate transactions.

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