Vodacom strikes key deals as it repositions pan-Africa operations

Vodacom's new
take on Africa

Operations in key
markets repositioned.

ITWeb Africa

Wednesday, Jun 26th

How will 'unfriendly' China respond to Africa's cryptocurrency opportunity?

How will ‘unfriendly’ China respond to Africa’s cryptocurrency opportunity?

China's interest in Africa's technology space may be on the rise, but not so in the cryptocurrency space where the Asian country's stance has been 'unfriendly' says Stephany Zoo, Head of Marketing at digital foreign exchange and payment platform BitPesa.

As top tech companies like Huawei, Tecno, ZTE and Alibaba continue to demonstrate a willingness to invest in in countries like Nigeria and Kenya, as they have done in recent years, Zoo sees more opportunities for Chinese start-ups to collaborate with their African counterparts to build up trust and influence in the market.

"I see more Chinese companies being interested in solar, ed-tech, e-commerce, and IOT," said Zoo. "There is still a lot (of) misunderstanding in exactly where the potential is from the Chinese side, and I've had a lot investors who decide to wait because of the risk associated with investing in such emerging markets. As more Chinese start-ups work with African start-ups, however, more investors will trust the market more."

Crypto use in Africa

Zoo doesn't agree that using cryptocurrencies for cross-border payments is becoming more popular in parts of Africa. She also disagrees that since China has the largest number of cryptocurrency owners, it could have reflected on Africa in this instance saying individual Chinese attitude towards cryptocurrencies differs from that of the government.

"China's current stance towards cryptocurrency is not particularly hospitable, and in fact we have struggled with some integration with Chinese partners because of their perception of our relation to bitcoin," she adds, referring to her experience working with some major crypto players in China in 2014.

This could have reflected on BitPesa too which started offering direct China-Africa transfers after its launch in 2013.

BitPesa had to use cryptocurrency to help with liquidity when it started because it was small and not many people wanted to trade with them.

"Now, as we have gotten bigger, we are able to use other tools to help manage our liquidity across our African (operation) and G20."

Zoo says. "Some people are using crypto for individual remittances, but our hope (is to) increase all liquidity, crypto or fiat for all of Africa. Such market-making helps grow economies."

The company's founder, Elizabeth Rossiello, echoed a similar view at the WEF 2019 in Davos recently, where she said they still use Bitcoin as a pathway to achieve the company's goal to make it easier to bridge the gap between African currencies for its liquidity.

According to Rossiello this is s necessitated by the fact that it is still impossible - in the last 11 years - to make bank transfers within a day from one African country to another within a 7% cost. Otherwise, one has to use a pathway through the US dollar which creates a lot of "bottlenecks and the need and use cases for an alternative system."

Crypto and blockchain growth

The discrepancy between the individual Chinese attitude and the official stance will not make China play a key role in crypto development in Africa though Chinese own more cryptocurrency than anyone else in the world, Zoo maintains.

Zoo believes interest in cryptocurrencies is cyclical, based on Bitpesa's ten countries of operation in Africa.

The continent is unlikely to be a major market for cryptocurrencies due its current purchasing power – a classic 'chicken or the egg' scenario, according to Zoo.

The lack of demand is not necessarily for consumer-facing reasons, but more because of economic circumstances - hence the need for regulators to proactively create friendly policies including regulations to attract investment.

"However, as many other experts have mentioned, I see enormous potential in Africa and blockchain," says Zoo, adding that while China's increasing influence in Africa's private sector is unquestioned, it still supports a number of projects based on cryptocurrencies' underlying blockchain technology - especially with trade, cross-border, and ecommerce through the China Africa Tech Initiative (CATI).

CATI helps connect African start-ups interested in working with Chinese peers where there has been an uptake in many consumer-facing industries.

ALSO ON ITWEB AFRICA

Kenyan consortium launches mobile banking app Published on 22 May 2019

Mobile loan product Stawi introduced, backed by Central Bank of Kenya.

NEC XON's biometrics demonstrations draw ministerial interest at ID4Africa Published on 24 June 2019

NEC's Bio-IDiom multimodal biometrics suite recently drew the interest of South Africa's Minister of Home Affairs at ID4Africa.

S BLOCK Co-host with World Blockchain Forum Singapore & World Blockchain Award Asia Published on 18 June 2019

Asia's highly anticipated blockchain event to be held on June 22-23, 2019 at the Marina Bay Sands in Singapore.