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2017 was a tremendous year for cryptocurrencies and their underlying blockchain technology. Bitcoin, the most well-known cryptocurrency, grew over 1000% in value during the year and enjoyed increased merchant acceptance worldwide, potentially signalling the global mainstreaming of the sector.

And across Africa, although digital currencies and blockchain technology are still generally in their infancy, the sector experienced healthy traction in 2017.

Strong consumer interest

Three African countries were among those most interested in ‘bitcoin’ worldwide in 2017, as measured by the in-country share of Google searches for the term. In fact, South Africa led all countries in this measure of bitcoin interest, while Nigeria (#7) and Ghana (#10) rounded out the top ten:

In addition, across all countries, global interest in ‘blockchain’ was highest in Ghana in 2017, with Nigeria next in line at #2:

Moreover, bitcoin trading volumes grew strongly during the year (e.g., see LocalBitcoins volume in Nigeria, South Africa, & Kenya) and, anecdotally, both formal cryptocurrency & blockchain conferences and informal meetups & Whatsapp/Telegram groups from Lagos to Lusaka experienced a surge in interest.

Notable investor interest

As African consumers exhibited strong interest in the sector, especially in South Africa, Nigeria, Ghana, and Kenya, investors from around the world also displayed an interest in cryptocurrency & blockchain-related companies operating in Africa:

Luno (formerly BitX), Africa’s largest bitcoin exchange (with operations in South Africa and Nigeria, as well as southeast Asia and Europe), raised a $9 million Series B round led by London-based Balderton Capital (whose exits include Betfair, MySQL, and Bebo). Other investors in the round include Johannesburg’s AlphaCode (a fintech-focused investment group & entrepreneur network backed by Rand Merchant Bank) and New York’s Digital Currency Group (one of the premier cryptocurrency & blockchain-focused investors in the US).

Bitpesa, a business-focused, cross-border payment platform leveraging the bitcoin blockchain for settlement (& operating in Kenya, Nigeria, Tanzania, and Uganda), raised $6.8 million across two Series A funding rounds in 2017. The rounds were led by New York’s Greycroft Partners (whose exits include Maker Studios, Braintree/Venmo, and Buddy Media). Other investors in the rounds include New York’s aforementioned Digital Currency Group, Menlo Park’s Pantera Capital (an investment firm focused exclusively on digital currency & blockchain companies), and San Francisco’s Blockchain Capital (one of the pioneer investors in the blockchain/cryptocurrency ecosystem).

And Cape Town-based The Sun Exchange, a crowdfunding marketplace leveraging blockchain technology for the cross-border commercialization of solar energy, raised a $1.6 million seed round from Johannesburg’s Kalon Venture Partners, New York’s Network Society Ventures, and three leading startup accelerators: San Francisco’s BoostVC, Oakland’s clean energy-focused Powerhouse, and Boulder’s TechStars.

Robust entrepreneurial activity

2017 also saw a surge of activity among innovators, both local and foreign, seeking to tap into opportunities in the sector across the continent.

Foreign players, CoinBR, a Brazilian full-service cryptocurrency service provider (with products including mining services, wallet & exchange services, and bitcoin ATMs & POS software), Bitspark, a Hong-Kong based remittance platform leveraging the blockchain, and Belfrics Global, a Malaysia-based bitcoin technology provider, planted flags in Africa in 2017.

CoinBR, launched its SmartWallet service in South Africa with CEO Rocelo Lopes seeing the move as “a point of entry point into…the rest of Africa.” Bitspark expanded its predominantly Asia-focused remittance service into Nigeria as “the first of many upcoming destinations in Africa.” And Belfrics Global launched a bitcoin exchange in Kenya with plans to open additional exchanges in Nigeria, Ghana, & Botswana and offer bitcoin payment gateways & point of sale systems in the near future. (Belfrics also raised ~$2.3 million in an initial coin offering in 2017.) In addition, publicly-traded fertilizer firm, African Potash, announced a joint venture with FinComEco, an agricultural exchange, to deploy a blockchain-driven agricultural trading platform for Africa.

At the same time, local entrepreneurs across the continent also moved to take advantage of apparent opportunities in the sector during the year.

For example, in Nigeria, Bitcoin exchanges Bitkoin.Africa, Tanjalo, & Bitpaya came to market, utilizing slightly different models with the ultimate goal of making it easier to convert between local and crypto currencies. And Shopnow.ng, a cryptocurrency-only e-commerce store (perhaps the first in Africa) also began operations. In addition, Cryptogene, a blockchain hub and community launched in December 2016/January 2017.

And elsewhere, existing startups operating in the sector, from Zimbabwe’s Golix to South Africa’s Wala to Kenya’s Land Layby and many more, also experienced noteworthy traction during the year.

Tailwinds for blockchain technology in Africa

For another perspective on challenges in African markets, see African Innovators Should Look East, Not West, For Business Model Inspiration.

Compared to counterparts in the developed world, many countries in Africa generally lack extensive financial infrastructure, stable currencies, and effective state institutions. Seen through traditional lenses, these characteristics tend to constrain opportunities for growth and scale across the continent.

In many ways however, in the context of cryptocurrencies and other blockchain technology, these factors are either mitigated or provide a conducive environment:

Looking ahead

Given the trends and factors above, coupled with increasing interest from consumers, investors, & entrepreneurs, it’s evident that cryptocurrency & blockchain-based technology is on a strong growth trajectory across Africa.

The technology clearly holds great promise across many industries, from financial services to the public sector to real estate, intellectual property, identity services, and more.

And while a bevy of innovators have begun to explore a range of applications, it’s worthwhile to resist any urges to view the technology as a panacea for the continent. Indeed, for all of blockchain technology’s potential in Africa, a range of market-specific obstacles to widespread adoption remain prominent in the near-term. That said, Africa appears to be a ripe market in the medium- and long-term.

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