While institutional traders are not prevalent in Sub-Saharan Africa, the region is known to have the highest number of P2P micro-retail transactions globally.

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

P2P cryptocurrency booms in Africa despite regulatory woes:

According to report Issued by blockchain transaction analysis firm Chainalysis, P2P retail users make up the bulk of crypto-related activities in Sub-Saharan Africa.

The institutional presence in the region is smaller than in other countries.

However, the volume of retail on the continent is largely driven by economic factors such as the need to preserve wealth.

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This is because the currencies of many of these countries have suffered for decades from the devaluation of their official currencies against the US dollar.

From the Chinalysis blog:

Our interviews suggest that this reflects the tendency of many young people in Sub-Saharan Africa to turn to cryptocurrency as a way to preserve and build wealth despite low economic opportunities, in contrast to other countries where we see many using cryptocurrency as a way to multiply their existing wealth.

The almost complete absence of institutional interest in cryptocurrencies in Sub-Saharan Africa can be attributed to the existence of strict regulatory policies.

For example, the Central Bank of Nigeria has banned commercial lenders from servicing cryptocurrency companies.

As noted by Chainalysis on its blog:

The ban imposed by the Central Bank of Nigeria also contributed to another measure of dependence on the retail side, as it increased peer-to-peer trading volumes.

According to the report, these P2P transactions are not limited to platforms like Paxful and Binance that have escrow and broker services.

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Direct P2P deals also occur between buyers and sellers outside of the region’s cryptocurrency exchanges.

Exploiting cryptocurrencies in foreign transfers:

Cross-border remittances are popular in sub-Saharan Africa due to the large number of expats sending money home.

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According to World Bank figures, inflows to sub-Saharan Africa in 2021 rose 14.1% to nearly $50 billion, after a decline of 8.1% the year before.

However, the high fees charged by the major platforms are a hindrance to users.

This situation prompted people to look for alternatives such as cryptocurrencies, as they provide a faster and cheaper alternative.

Cryptocurrencies have also been beneficial for companies importing materials as the region is seeing the emergence of crypto-payment corridors between partners in Africa and Asia.

These payment corridors often use stablecoins such as Tether (USDT) to facilitate transactions.

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