NBE ከጀመራቸው ምርጥ ስራዎች የሆነውን Financial Stability Report ሁለተኛው ሪፖርት ዛሬ ይፋ ተደርጓል።

መልካም ንባብ!

NBE's 2024 Financial Stability Report Summary:

Key Numbers and Outlook: 2023/24 vs 2022/23

Economic Growth:
 GDP grew by 8.1% from 7.2%
 Projected to grow by 8.4% in 2024/25

Sector contributions to GDP in 2024:
 Services: 40.2% (↓ from 40.3% in 2023)
 Industry: 29.1% (↑ from 28.8% in 2023)
 Agriculture: 31.8% (↓ from 32.1% in 2023)
Inflation Trends:
 Inflation reduced from 29.3% to 19.9%
 Projected inflation to 12% by June 2026

Foreign Exchange Reserves:
 Foreign Exchange Reserves ↑ by 240%
 Exports grew by 81% (Q1)
 Remittances increased by 26%.

Debt and Deficit:
 Public extrnl debt ↓ frm 17.2% to 13.7% of GDP
 Domestic debt ↓ from 22.1% to 18.7% of GDP
 Fiscal deficit ↓ to 2.1% of GDP ↓ from 2.5%
 External debt to reach 28.3 % of GDP in 2025, due to birr depreciation (IMF projection)

Financial Sector Highlights Banking Sector:
 Assets reached 3.4 billion birr ↑ 15.1% (YoY)
 Assets make up 96.1% of ttl financial system
 Total deposits ↑ to 2.5 T birr, a 15.4% ↑ YoY
 Loans & bonds ↑ to 2.2 T birr, 16.1% growth

CBE's Market Share Decline
 CBE's Assets declined to 47.9% ↓ from 49.5%
 Deposits dropped from 48.7% to 47.1%.
 Share of total capital fell to 24.2% from 27.5%
Despite declines, CBE remains systemically important bank, with a strong capital adequacy ratio and liquidity position exceeding regulatory requirements.

Microfinance (MF) & Capital Goods (CG) Finance Sectors:
 MF assets fell by 2.6%, ending at 60.1 B. birr
 CGF assets grew by 18.5% reaching 6.4 B. birr

Insurance Sector:
 Total assets increased by 32%, totaling 65.6 billion birr

Number of Financial players:
 Total number of Banks: 32
 Micro-Finance: 53 (↑ 10.42 %) from 48
 Insurance companies: 18
 Payments Instrument lssuers & PSO: 11 ( ↑10%)
 Capital goods finance: 6
 Re-insurance company: 1

Key Financial Ratios:
 Loans as a % of GDP ↓ from 21.7% to 19.0%
 The banking sector’s capital adequacy ratio remains well above the regulatory minimum of 8%

Digital Financial Services (DFS): Transactions processed through digital channels:
 Number: increased by 38% YoY
 Value reached 1.1 trillion birr, a 44% increase
 Access points for DFS increased by 17.4%
Capital

Market Initiatives:
 ESX is set to launch in late 2024.
 Initial trading in the interbank money market processed transactions worth 20 billion birr within three weeks

Notable Variations from 2023
 Banking sector deposit growth slowed from 24.6% in 2023 to 15.4% in 2024
 The GDP-to-total-assets ratio fell from 37.6% in 2023 to 29.5% in 2024 due to faster GDP growth

What else do you think should be added in the summary? Comment below👇

#ባንኮች_በሚሰጡት_ዓመታዊ_ብድር_ላይ_የተጣለው_ገደብ_ሊሻሻል_ነው!

ባንኮች የሚያቀርቡት ዓመታዊ የብድር መጠን ከ14 በመቶ እንዳይበልጥ ገደብ የሚጥለውና ከአንድ ዓመት በላይ ተግባራዊ ሲደረግ የቆየው የኢትዮጵያ ብሔራዊ ባንክ መመርያ ሊሻሻል መሆኑ ተሰማ፡፡ ባንኮች በሚሰጡት ዓመታዊ ብድር ላይ የተጣለው ገደብ ሊሻሻል ነው።

በበርካታ ባንኮች ላይ ጫና እየፈጠረ መሆኑ በተደጋጋሚ ሲነገርለት የቆየው ይህ መመርያ፣ ገደቡን እስከ ማንሳት የሚያስችል ማሻሻያ የሚደረግበት ስለመሆኑ ሪፖርተር ያገኘው መረጃ ያመለክታል፡፡

ሐሙስ ኅዳር 19 ቀን 2017 ዓ.ም. የአዲስ አበባ ንግድና ዘርፍ ማኅበራት ምክር ቤት ባዘጋጀው የውይይት መድረክ ላይ የተገኙት የኢትዮጵያ ብሔራዊ ባንክ የውጭ ኢኮኖሚ ትንተናና ዓለም አቀፍ ግንኙነት ዳይሬክተር አቶ ሀብታሙ ወርቅነህ፣ መመርያውን ለማሻሻል ዝግጅት እየተደረገ መሆኑንና ማሻሻያውም ገደቡን እስከ ማንሳት ድረስ እንደሚዘልቅ ጠቁመዋል፡፡

የብድር ገደቡ ባንኮች የጥሬ ገንዘብ እጥረት እንዲያጋጥማቸው ካደረጉ ምክንያቶች መካከል አንዱ ነው የሚል ተደጋጋሚ ጥያቄዎች መቅረባቸው፣ ብሔራዊ ባንክ መመርያውን ለማሻሻል ገፊ ምክንያት እንደሆነበት ለማወቅ ተችሏል።

#ሪፓርተር

#ብድር #ፋይናንስ #ባንክ

የብሪክስ አገራት አዳዲስ የመገበያያ ገንዘብ የሚፈጥሩ እንደሆነ አሜሪካ 100 ፐርሰን የታሪፍ ጭማሪ እንደምታደርግ አስታወቀች ኢትዮጵያ ጨምሮ የብሪክስ አባል በመሆን እያንቀሳቀሱ የሚገኙ ሀገራት ከዶላር ለመራቅ የሚያደርጉት እንቅስቃሴ አሜሪካ ቆማ የማትመለከት መሆኑን የጠቀሱት አዲሱ የአሜሪካ ፕሬዝዳንት ዶናልድ ትራምፕ በዚህ ድርጊታቸዉ የሚቀጥሉ ከሆነ እስከመጨረሻው ከገበያዉ ላይ ያላቸዉን ድርሻ ሊያጡ እንደሚችሉ ፍንጭ ሰጥተዋል። በዚህ እንቅስቃሴ ላይ የሚታፉ እንደ ኢትዮጵያ ፣ ቻይና እና ሌሎች የብሪክስ ሀገራት አብዛኛው ኢኮኖሚያዊያቸዉ በአሜሪካ ላይ ጥገኛ በመሆኑ ሌሎች አማራጮችን ማግኘት እስካልቻሉ ድረስ ተጎጂ ሊሆኑ እንደሚችሉ በዘርፉ የተሰማሩ ባለሞያዎች እንደ ስጋት ሲያነሱ ቆይተዋል። የብሪክስ ሀገራት የራሳቸዉን መገበያያ እንደማይፈጥሩ ማረጋገጭ እንዲሰጣት የጠየቀችዉ አሜሪካ ይህ ካልሆነ ግን ከታሪፍ ጭማሪዉ በዘለለ በሀገሪቱ ላይ ምርታቸውን እንዳይሸጡ ይደረጋሉ ብላለች። ኢትዮጽያን ጨምሮ ግብፅን፣ ኢራንን ፣ ሳዑዲ አረቢያን እና የተባበሩት አረብ ኢምሬትስን እ.ኤ.አ. በ 2023 በተካሄደው የመሪዎች ስብሰባ ፣ ቡድኑ ከአስር ዓመታት በላይ ለመጀመሪያ ጊዜ አባልነት ተቀብሏል።

Reflecting on the Second Financial Stability Report by the National Bank of Ethiopia

By #Elias_Adem

The National Bank of Ethiopia recently released its second Financial Stability Report, providing a comprehensive examination of various financial risks and developments within the Ethiopian economy. This report is well-prepared, covering numerous critical issues, including economic growth, contributions from services, industry, and agriculture, inflation trends, and foreign exchange dynamics. It also thoroughly examines sectors such as private banking, the Commercial Bank of Ethiopia (CBE), the Development Bank of Ethiopia (DBE), insurance, microfinances, and digital financial services.

Although I believe the report doesn't give enough details about the Development Bank of Ethiopia and the insurance industry with the same thorough examination given to the banking industry, it covers a wide range of important topics and presents significant data. Currently, my reflection is only limited to the Islamic finance industry.

Overlooked Items and Consolidated Sectors

While the report is commendable for its breadth and depth, certain areas would benefit from more detailed analysis:

Islamic Banks and Windows The report consolidates figures for conventional banks, Interest-Free Banks (IFBs), and Islamic windows, but it does not separately analyze their industry structure, risks, and contributions. A separate examination of these entities would provide a clearer picture of their specific characteristics and performance metrics, including compliance with Shariah principles and risk management practices unique to interest-free finance. For instance, assessing shariah risks and evaluating profit-sharing practices in Mudarabah investment deposits would offer valuable insights.

Takaful Windows Similarly, the report does not provide a distinct analysis of Takaful (Islamic insurance) windows. Including a detailed examination of these windows would highlight their unique risks and contributions to the financial sector, such as their compliance with Shariah law and the specific risk management practices they employ.

In the context of financial sector stability, while the report adeptly covers commercial banking and their role in the economy, it overlooks the distinct dynamics of Islamic financial institutions. Given that Ethiopia is home to both Islamic banks and windows, including Takaful operators, it's crucial for the National Bank of Ethiopia to provide a separate examination of these sectors. This would encompass:

Compliance with Shariah Principles: Regular audits and assessments of compliance with Shariah principles to ensure that the financial products and services align with Islamic law.

a) Risk Management Practices: Detailed analysis of risk management practices specific to interest-free finance, including risks related to profit-sharing in Mudarabah investment deposits and other Islamic financial instruments.

b) Regulatory Environment: Evaluation of the regulatory environment for interest-free banks, including the adequacy of laws and regulations addressing non-interest banking. This should also cover the effectiveness of the Shariah supervisory board and the overall governance framework.

Conclusion:

The National Bank of Ethiopia's second Financial Stability Report is undoubtedly comprehensive and well-prepared, fulfilling many of the necessary requirements for a central bank stability report. However, incorporating separate analyses of Islamic banks, Islamic windows, and Takaful windows would enhance the report's depth and provide a more complete understanding of the financial system's stability. This approach aligns with best practices observed in other central banks, ensuring a thorough assessment of all financial sectors.

By addressing these overlooked areas and providing a more granular analysis, the National Bank of Ethiopia can offer more detailed insights into the specific risks and contributions of Islamic financial institutions, thereby fostering a more inclusive and resilient financial system.

#Financial_Stability #Fintech #Ethiopia #Banks

CBE Board

Brook Taye (PhD), the CEO of Ethiopian Investment Holdings (EIH), appointed Henok Teferra, Mahlet Kassa, and Henok Assefa to the board of the state-owned Commercial Bank of Ethiopia (CBE).

They'll join a 10-member team, bringing insights and a broad range of experience from sectors like aviation, law, and entrepreneurship.


#ESX #Capitalmarket #CBE

Via #AddisFortune

The recent shift to a market-driven foreign exchange (FX) system in Ethiopia has sparked both opportunities and risks for the banking sector, according to industry experts. While the flow of forex from outside increased following macroeconomic reforms, the anticipated growth in foreign exchange transactions has not materialized as expected.

Since July 29, 2024, commodities such as gold and coffee, which were previously traded on the black market, have begun to be processed through banks. However, experts indicate that the development in this area over the past three months has fallen short of expectations.

Tewodros Hailu, Director of Awash Bank’s Banking Transformation Directorate, commented on the implications of the government’s reforms on the financial sector. “Foreign exchange has brought risk to banks,” he stated. “We were previously focused on local currency, but now FX exchange has become critically risky.”

Tewodros also noted that the introduction of new foreign banks into the Ethiopian market could intensify competition for local banks, particularly given their relatively low capital and assets in dollar terms. He highlighted a significant challenge facing the sector: a lack of trained personnel. “We are working to address this issue,” he added.

Despite these challenges, Habtamu Workineh, Director of External Economic Analysis and International Relations at the National Bank of Ethiopia (NBE), reported that banks’ foreign exchange reserves have reached $600 million within just four months. He noted that the NBE has licensed 12 non-bank foreign exchange offices, which have conducted transactions totaling $774,000 as of November 27, 2024. Of this amount, $540,000 was sold through these offices.

Habtamu emphasized that five of the licensed offices are operational, which could help mitigate the flow of foreign currency into the parallel market.

These developments were discussed during a panel event hosted by the Addis Chamber of Commerce and relevant stakeholders, focusing on the implications of recent macroeconomic reforms on Ethiopia’s financial sector. The discussions underscored both the potential benefits and risks associated with the new FX regime.

The NBE’s reforms aim to create a more competitive banking environment while ensuring that foreign exchange transactions are managed effectively. However, industry leaders have expressed concerns about how these changes will impact local banks and their ability to compete with new entrants.

As Ethiopia navigates its transition to a market-driven foreign exchange system, stakeholders are closely monitoring both the challenges and opportunities that arise. While there is optimism regarding increased foreign exchange reserves and reduced reliance on black market transactions, concerns about competition and personnel training remain critical issues for the banking sector.

#Capital
#Forex #NBE #finance #Exchange

ሕብረት ባንክ በ2023/24 በጀት ዓመት ከታክስ በፊት 3.08 ቢሊዮን ብር ትርፍ ማስመዝገቡ ተገለጸ።

የሕብረት ባንክ ባለአክሲዮኖች 27ኛ መደበኛ ጠቅላላ ጉባኤ ሕዳር 19 ቀን 2017 ዓ.ም በኢንተርሌግዠሪ ሆቴል ተካሂዷል፡፡

ጉባኤውን በንግግር የከፈቱት የሕብረት ባንክ የዳይሬክተሮች ቦርድ ስብሳቢ ኢንጂነር ሳምራዊት ጌታመሳይ ባለፈው በጀት አመት አለም አቀፍ እና አገር አቀፍ ተግዳሮቶችን በመቋቋም ባንኩ በሁሉም የአፈፃፀም መለኪያዎች አመርቂ ውጤት ማስመዝገቡን ገልፀው ከታክስ በፊት 3.08 ቢሊዮን ብር ትርፍ መገኘቱን አስታውቀዋል፡፡ ሰብሳቢዋ አያይዘውም በበጀት ዓመቱ የባንኩ አጠቃላይ ተቀማጭ ገንዘብ 74.65 ቢሊዮን ብር መድረሱንና የባንኩ የተከፈለ ካፒታል ወደ 7 ቢሊዮን ብር ማደጉን ገልጸዋል።

Coopbank has officially signed an agreement with Samket Engineering and Construction PLC to construct a state-of-the-art building in Adama. Once completed, it will stand as the tallest and most modern structure in the city adding a unique view to the City's Skyline.

#Coopbank #Banking

ባለፀጋው Elon Musk ይባላል።

የዓለማችን ቀዳሚ ባለሃብትና Genius ሰው ነው።

እንደዚህ ሰው የተትረፈረፈ ሀብት እና የፈለገውን የማድረግ ችሎታ ላለው የቢሮው ውበት የሚያስደንቅ ፣ ስፋቱ ፈረስ የሚያስጋልብ 😂፣ ልዩ ጥበቃ የሚደረግበት በሰማይ ጠቀስ  ህንፃ ይሆናል ብለን ልናስብ እንችላለን። 

እሱ ግን እንዲህ ይላል..

"I think it's important for leaders to be at front lines, I want to be in the middle of the battle."

#ElonMusk #Tesla #spacex

The Financial Intelligence Service has signed an agreement with the Addis Ababa Revenue Bureau to investigate tax evaders and ensure that money obtained through illegal means is processed legally.

Under the agreement, the Revenue Bureau will provide information on suspected tax evaders, allowing the Service to track down illicitly obtained wealth and ensure appropriate taxes are paid.

Individuals who fail to meet their tax obligations will be chased, and the outcomes of investigations into illegal funds will be treated as legal cases, holding individuals accountable.

የፋይናንስ ደህንነት አገልግሎት ግብር የሚሰውሩ ግብር ከፋዮችን ለመመርመርና በወንጀልም ለመጠየቅ የሚያስችል የመግባቢያ ስምምነት ከአዲስ አበባ ገቢዎች ቢሮ ጋር ተፈራረመ።
የፋይናንስ ደህንነት አገልግሎት በህገወጥ መንገድ የተገኘን ገንዘብ ህጋዊ ማስመሰልና ሽብርተኝነትን በገንዘብ መርዳት ወንጀሎች መከላከል ላይ እንደሚሰራ የነገሩን የአገልግሎቱ ዋና ዳይሬክተር አቶ ሙሉቀን አማረ ናቸው።
''በህገወጥ መንገድ ገንዘብ ከሚገኝባቸው መንገዶች አንዱ ግብር ስወራ ነው በዚህ መንገድ ገንዘብ የማያሸሹ ግብር ከፋዮችን መረጃ ከገቢዎች ቢሮ በመውሰድ የግለሰቦቹን የፋይናንስ እንቅስቃሴ መመርመር የስምምነቱ ዋናው አላማ ነው'' ብለውናል።
አቶ ሙሉቀን እንደሚሉት #የገቢዎች_ቢሮ በግብር ስወራ የሚጠረጥራቸውን ግለሰቦች መረጃ ይሰጠናል፣ የፋይናንስ ዝውውራቸው ላይ የማጣራት ስራ እንሰራለን ያሸሹት ሃብት ካለ
ተከታትሎና ጉዳያቸውን መርምሮ የሚጠበቅባቸውን ግብር እንዲከፍሉ ይደረጋል ብለዋል።
በተጨማሪም ስምምነቱ በተለያየ ስራ ላይ ተሰማርተው ሲሰሩ ከቆዩ በኋላ ለሰሩበት ግብር መክፈል ሲገባቸው ግብራቸውን ሳይከፍሉ የጠፉና የግብር እዳ ያለባቸውን ግለሰቦች ተከታትሎ የሚጠበቅባቸውን #ግብር እንዲከፍሉ ለማድረግም እንደሆነ ሰምተናል።
የምርመራው ውጤት በህገወጥ መንገድ የተገኘን ገንዘብ ህጋዊ አስመስሎ መጠቀምን ካመለከተ ክስ ተመስርቶ ግለሰቡ በህግ እንደሚጠየቅ አቶ ሙሉቀን ጠቀሰዋል።
የአዲስ አበባ ገቢዎች ቢሮ ሃላፊ አቶ ቢኒያም ምክሩ በበኩላቸው ''ከተማዋ በተያዘው የ2017ዓ.ም 230 ቢሊዮን ብር ከገቢ ግብር ለመሰብሰብ እቅድ ይዛ እየሰራች ነው'' ብለዋል።
ይሁንና ግብርን የሚያሸሹ እንዲሁም ለከተማዋ መክፈል ሲገባቸው በሚሊዮን የሚቆጠር ብር ይዘው የተወሩና የግብር እዳ ያለባቸውን ሰዎች በማፈላለግ የሚጠበቅባቸውን ግብር እንዲከፍሉ ለማድረግ ከፋይናንስ ደህንነት አገልግሎት ጋር ያደረግነው ስምምነት እይደሚያግዝ ተናግረዋል።

@ShegerFM

The Surge in Customer Deposits and Its Implications for Ethiopia’s Capital Market

Deposits from customers have surged by 116 billion ETB in 2024 financial year across four medium-sized banks in Ethiopia: Awash (43B), Abyssinia (34B), Dashen (31B), and Hibret (8B).
While this is a clear sign of growing trust in the banking sector, there’s a critical concern: the interest rates offered by banks are still below inflation levels, leaving depositors with limited returns.

This mismatch could have significant consequences. With the lack of viable alternative investments, many are continuing to park their money in banks, despite the low returns. But as inflation erodes the real value of these deposits, what happens when customers seek better opportunities?

As Ethiopia's Capital market begins operations, could this trend shift as investors look for higher returns? Or will the deposit surge continue as the absence of attractive alternatives forces investors to stay in low-yield assets?

The gap between interest rates and inflation presents a unique challenge and opportunity—a chance for the capital market to provide an outlet for investors seeking better returns. The question is: Will this trend hold, or will we see a shift as the market matures?

What are your thoughts on the evolving investment landscape in Ethiopia?

Via #M_Tesfaye

#CapitalMarke #ESX

#Bitcoin
#Part_1

As Bitcoin is on the cusp of the landmark $100,000 ATH price in November and surpassing Silver & several other fiat currencies with its $2T market cap boosted by institutional funding and expectation of a pro-crypto administration in the US, it is high time to review the history and use-cases of Bitcoin in Africa, simply because, “Africa will define the future (especially the Bitcoin one)” as Jack Dorsey said it after his listening tour to the continent back in 2019.

While DeFi, which is exemplified by Bitcoin’s ecosystem, seemed a recent movement to many, Africa has naturally embraced decentralized finance for generations through informal savings groups, microloans, and community lending networks, whether these are termed Ajo, Hawala, Stokvels, Chama, Tontines, Esusu, Equb or something else. These communal practices have long provided financial solutions outside of the traditional formal banking system, creating a foundation for the rapid adoption of modern decentralized networks. Then arrived Africa’s innovative gift to the world – Mobile Money.

Spurred by rapidly expanding mobile phone access and fragmented banking, mobile money has brought a new digitally native generation to financial inclusion in the age of the internet, demanding internet currency for its global transactions. This created the foundation for Africa as an ideal landscape for crypto's growth, and in particular that of Bitcoin when it emerged in 2009. It was inevitable that the use and adoption of Bitcoin would deepen in Africa as Africa’s digitally savvy population converses with the global economy and is faced with a shallow reach of traditional money systems, especially on a last-mile basis. A continent with the world’s largest working-age population that is increasingly working remotely for global companies demanded rapid, cost-effective and interoperable remuneration and payroll payment systems from offshore employers & clients.

Here comes Bitcoin, a digital currency born in & for the internet economy and Africa deployed it to solve real-life pain points and create formidable use-cases. What has been the track record of Bitcoin in Africa?

Pioneering Roots of Decentralized Finance

Building blocks of Decentralized Finance Bitcoin’s introduction to Africa in 2009 went mostly unnoticed, but interest grew in the early 2010s. With traditional financial systems struggling under high fees and limited access, Bitcoin offered a low-cost solution, especially for remittances in Nigeria, South Africa, and Kenya.

Rising Momentum in Crypto Adoption

While initially mainly used for peer-to-peer value transfers, Bitcoin has been used in cross-border trade, remittances, payroll management for remote work, as a store of value and hedge against inflation across Africa, making it now leading the globe in crypto adoption, with countries like Nigeria, Ghana, and Kenya at the forefront. According to a Chainalysis report, Africa's cryptocurrency market grew by over 1,200% between July 2020 and June 2021, making it one of the fastest-growing regions globally. Fast forward to June 2024, Bitcoin accounted for 18.1% of all blockchain money transfers in sub-Saharan Africa, almost doubling from 9% a year before. And comparing the stat of 2023, as Chainalysis report puts it, “in no region is Bitcoin more dominant than Sub-Saharan Africa, as the world’s first cryptocurrency makes up a bigger share of transaction volume there than in any other region,”.

#Bitcoin
(#Part 2)

Key partnerships have also fueled the growth, including Jack Dorsey & Jay Z’s 500 BTC donation to create Btrust to fuel the next wave of software engineers and developers in the Bitcoin ecosystem, Square/Block’s investment in Yellow Card, TBD’s partnership to deploy bitcoin for cross border payment with Yellow Card, major exchanges including Paxful and Binance’s early expansion in Africa. Peer-to-peer (P2P) platforms also surged, enabling people to trade Bitcoin in areas with limited or non-existent traditional financial & banking access. And this week, Nigeria-based Recursive Capital, an early-stage Bitcoin VC Fund investing in Bitcoin companies in Africa, announced the first close of its Fund I with Jack Dorsey and other anchor investors. The fund close is set to be deployed to lay the foundations for a thriving Bitcoin ecosystem in Africa. The fire-side chat Africa Fintech Summit had with Jack Dorsey in 2020 around Bitcoin & Africa below provides more insight.

…And Bitcoin in the Humanitarian Assistance Space, Rural Electrification, etc

Bitcoin found a new use case in Africa in charity, education, disaster & emergency situations and even rural electrification. As an example, the global peer-to-peer Bitcoin marketplace Paxful has been building schools that are fully equipped with a state-of-the-art water well system across rural Africa with its program named #BuiltWithBitcoin, all fully funded by Bitcoin. Binance’s philanthropic wing has been operating a program called Lunch for Children, using donated cryptocurrencies to buy lunch for children. In Mombasa, Kenya, the Bancor Foundation has been providing bankrupt communities living in slums with a surprising way out of poverty with crypto.

Governments & infrastructure developers have been citing the demand-supply mismatch of renewable energy mini-grid projects across rural Africa, holding up investment justification for mass rural electrification. Bitcoin mining has come as a solution too many times in this scenario in being a ‘buyer of last resort’ for mini-grid renewable energy in rural Africa, guaranteeing demand and hence encouraging rural electrification. As an example, Gridless, an African green bitcoin mining firm, is expanding energy access to several countries in Africa by using bitcoin mining to make renewable mini-grids financially sustainable in rural communities, sharing bitcoin mining revenue with power companies & local community – doing so creating global income for local power production and cutting renewable energy cost to the rural community.

The Challenges and Opportunities

Despite all these use-cases, success stories and impacts, adoption of Bitcoin in Africa has not been without its own concerns, challenges & controversies. Let us see some of the challenges and potential opportunities presented to Africa with Bitcoin.

#Bitcoin
#Part 3 (Final Part)

Looking Over the Horizon

The short-term & medium-term outlook of Bitcoin’s future in Africa will depend on its competition and interoperability with Mobile Money and Stablecoins – for comparison, read AFTS’ editorial Stablecoin is the future of Africa's Remittance & Trade with Rest of The World.

Airtime-crypto-fiat currency on/off-ramp orchestration innovations like fonbnk's offering has potential on creating seamless Mobile Money-Crypto interoperability. The real litmus test for Bitcoin’s use in Africa will be the outcome of its battle – or collaboration - with mobile money & stablecoins for dominance and utility as the visual below shows.

Will Bitcoin’s utility, transaction cost, design and infrastructure compete or collaborate seamlessly with stablecoins and mobile money with effective on/off ramp orchestrations? Time will tell.

Despite the aforementioned and other problems and challenges, Bitcoin adoption in Africa will surely be growing, driven by its potential to improve remittances, hedge against inflation, and offer inclusive and last-mile financial services to the unbanked. Addressing these challenges will require clearer regulations, improved education & fraud prevention mechanisms, infrastructure development including access to connectivity and reliable electricity, collaboration between regulators and the crypto industry, on/off ramp interoperability and empirical evidence of use cases tailored to African needs with local software engineering talent.

Our Verdict

Bitcoin’s milestone celebrates Africa’s journey with cryptocurrency, rooted in resilience, ingenuity, speed of creativeness and innovation. Africa is poised to shape the future of crypto, drive financial inclusion, and redefine global finance with a unique version of decentralized finance. The Africa Fintech Summit team will continue to provide thought leadership around blockchain use cases in Africa, including Bitcoin, through its research publications and flagship summits, including the upcoming 2025 editions in Washington DC & Accra, Ghana. Join the Africa Fintech Summit - in person and virtually - to meet the players in this growing and rapidly innovating space and connect with innovators, entrepreneurs, and key stakeholders driving the future of crypto and fintech across the continent.

In conclusion, we agree both with Jack’s sentiment of “Africa will define the future (especially the Bitcoin one)” and AFTS’ 2022 editorial that stated, “cryptocurrency's future is being defined in Africa”. If in any doubt about this, as we say in Swahili, "Kuwa tayari kwa mshangao mwingine wa Afrika", that is "be prepared for another African surprise!"

Thanks for reading!

Link: https://www.linkedin.com/pulse/history-future-bitcoin-africa-afts-editorial-quc8f/