Only 17 percent see an opportunity in intermediation of crypto assets, while 27 percent think they could be used for payment in Africa and for tokenisation of physical assets, and only 21 percent see a business prospect in their storage.
This is despite the crypto market generally growing over the last year, with increased adoption in Africa and improved market capitalisation of the unconventional digital assets globally.
Industry challenges
Data from blockchain research firm Chainalysis shows more Africans have been adopting crypto trade and ownership over the years. Last year, the volume of crypto traded on the continent hit $117 billion, up from $100.6 billion in 2022.
In East Africa, it is estimated that over 12 million people currently own cryptocurrencies, and Kenya is among the countries with the highest adoption rates on the continent.
At the same time, with the licensing of the Bitcoin Exchange Traded Funds in the Unites States, many investors have warmed up to the crypto assets, causing a surge in prices and the general market capitalisation.
Barely a month after the listing of the Bitcoin ETFs on the New York Stock Exchange and Nasdaq, they have attracted over $30 billion in investments, while the general market cap of the crypto industry improved by over 20 percent to $1.9 trillion, the highest level in two years, says CoinMarketCap.
But the growth notwithstanding, much fewer African financial institutions want to be associated with cryptocurrencies and the application of its technology, through stablecoins or tokenisation, for instance.
“The instability of the cryptocurrency market has made the majority of African financial institutions wary of crypto assets and decentralised finance,” says the barometer published last week.
Stakeholders in the crypto industry admit that the challenges unique to the sector, among them the high volatility, have indeed eroded the confidence of the conventional banking sector on them, slowing their adoption in legal use.
“There’s no surprise to see a decreasing sentiment on crypto assets in general among African finance industry leaders. It is in line with current market downside of those assets’ financial performance,” said Mamadou Toure, CEO of Ubuntu Tribe, a tokenisation company.
“In bull markets, sentiment is high. Conversly, sentiments are low in bear markets. We are currently in a bear market.”
The bear market could, however, be approaching its end, at least in the short run. Bitcoin price, for instance, has risen by over $10,000 in one month, hitting $51,000, the highest level since 2021.
However, as the conventional financial industry loses interest in crypto assets, which are yet to be accepted by regulators across the continent, most of them are now warming up towards Central Bank Digital Currencies (CBDCs).
About 63 percent of all financial industry players believe that CBDCs will have moderate to significant impact on financial inclusion in Africa, and 78 percent say they will have a positive effect on access to financial systems on the continent.
Financial industry players also believe CBDCs will boost monetary sovereignty, resilience, competition, efficiency, and the fight against illicit use of currency on the continent.
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