The use of cryptocurrencies in Africa could usher in a new dawn in digital payment systems where traditional financial systems are failing to adequately cater to the teeming population of financially excluded communities.
As published in the ‘cryptopolitan’, the world was”in the midst of a financial revolution that is seeing traditional systems and centralized silos being challenged and broken down by decentralized alternatives”.
The report which said that the cost of financial inclusion range from the increased cost of processing transaction to lack of access to credit, leaves them with little opportunity in making informed financial decisions stated that the financially excluded consumers will gain from the changing trajectory.
“A lack of financial access can also limit people’s ability to invest in the opportunities that are available to them and can compel them to use non-standard and often complex forms of non-traditional finance, such as borrowing from friends or giving their possessions as collateral for loans at great personal risk.”
According to the report, while digital banking has increased the drive for the inclusion of the unbanked, incorporating Blockchain Technology would further accelerate its pace.
“By merging the trustless and permissionless nature of blockchain and its underlying Distributed Ledger Technology (DLT) with mobile banking offerings, we can make existing money infrastructures even more efficient while reducing costs, increasing security, providing financially inclusive products and services, and simplifying local and international funds remittances for businesses and consumers alike.
“DLT-based cryptocurrency payment technology can be used for everything from global remittances and SME payments to disbursements and treasury flows. In Africa, where financial markets between countries are not only complex but highly competitive, crypto and blockchain technologies can be used in conjunction with the 300+ mobile money systems currently in operation on the continent to open up closed-loop systems and provide financial access in wider use cases.
“Across developing economies, particularly in Africa, digital payments have gained considerable traction as a safe, fast, reliable, and cost-effective way to send and receive money. Driven by performant and user-friendly mobile technologies, new digital payment solutions can quickly and effectively reach unbanked and underbanked individuals who have been long excluded from the traditional financial system.” the report said.