Nigeria has positioned itself as the second-largest global hub for cryptocurrency adoption, solidifying its status as a frontrunner in digital finance, as indicated in the latest report by Chainalysis.
This ranking highlights Nigeria’s flourishing crypto landscape, where digital assets, particularly stablecoins, are increasingly utilized for daily transactions, remittances, and business operations. The nation’s increasing crypto use reflects a broader trend in Sub-Saharan Africa, where notable growth in crypto adoption is taking place.
Chainalysis attributes this growth to the rising demand for alternative financial services and more accessible international marketplaces, placing Sub-Saharan Africa on the global map as a center for innovation and financial inclusivity.
Progressive Trends Across Sub-Saharan Africa
Sub-Saharan Africa, albeit contributing only 2.7% to global transaction volumes, has seen a significant influx of on-chain value, amassing $125 billion from July 2023 to June 2024—an increase of $7.5 billion from the previous year.
Despite its small share in the global crypto economy, the region is becoming increasingly influential, with several countries emerging as key players. Nations such as Ethiopia, Kenya, and South Africa have made their mark, entering the top 30 on the Chainalysis Global Adoption Index.
Moyo Sodipo, COO and co-founder of the Nigerian crypto exchange Busha, remarked:
“Nigeria’s high adoption rates illustrate how integral crypto has become for everyday transactions.”
He elaborated that Nigerians rely on cryptocurrencies for bill payments, mobile data purchases, and international remittances, largely due to the traditional financial system’s challenges, including inflation and currency devaluation.
Additionally, the report underscored the region’s leadership in decentralized finance (DeFi) adoption, which offers financial services like lending and borrowing without the need for conventional banks, which remain unattainable for many people.
The World Bank noted that as of 2021, only 49% of adults in the area had bank account access, rendering crypto a compelling option for millions seeking financial solutions.
Stablecoins and Economic Resilience
Stablecoins are crucial for the crypto economy in Sub-Saharan Africa, with Chainalysis estimating their share to be 43% of the total crypto transactions in the region. These dollar-pegged currencies have gained popularity in areas where local currencies remain unstable and access to US dollars is limited.
Nigerians are increasingly turning to stablecoins like USDT and USDC to safeguard their assets against the devaluation of the local currency. The ongoing foreign exchange crisis has amplified the demand for stablecoins, allowing businesses to engage in international trade hindered by currency shortages.
Chris Maurice, CEO of the African crypto exchange Yellow Card, stated:
“Banks are short on dollars, and government reserves are likewise insufficient, even if they were available.”
He explained that stablecoins provide a dependable alternative for businesses involved in international trade, encompassing varying scales from small importers to major multinational firms.
Ethiopia stands out as the fastest-growing market for stablecoin transactions, experiencing a remarkable 180% increase in retail-sized transfers over the past year. This surge closely followed a 30% depreciation of the birr, the local currency, after the government eased currency restrictions as part of a $10.7 billion loan agreement with the IMF and World Bank.
Stablecoins are also transforming cross-border remittances, a lifeline for many African families, making them cheaper and quicker compared to traditional fiat methods.
In Nigeria alone, stablecoin transactions below $1 million approached $3 billion in early 2024, underscoring their importance for small and medium-sized monetary transfers.
Implications for Crypto and Financial Inclusion
As Nigeria and other Sub-Saharan nations deepen their involvement with cryptocurrencies, stablecoins are anticipated to play a pivotal role in stabilizing economies, facilitating global trade, and streamlining cross-border payments.
South Africa, with its expanding institutional engagement and integration with traditional finance, is on the verge of becoming another significant player in regional crypto adoption.
Rob Downes, who heads digital assets at Absa Bank in South Africa, commented:
“Nigeria and South Africa are setting examples of how cryptocurrency can enhance financial inclusion.”