Absa and CV VC reveal insights on blockchain technology's impact on African markets through their recently released report.
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In a groundbreaking development, the Africa Blockchain Report 2024, presented by Absa and blockchain venture capital firm CV VC Africa, has highlighted the growing potential of stablecoins in transforming African finance.
Brenton Naicker, Principal and Head of Growth at CV VC Africa, stated that the use of blockchain technology in Africa is no longer speculative, with venture capital following its utility. This shift is evident in the record 7.4% of all venture capital funding in Africa that blockchain ventures captured in 2024, more than double the global average.
One area where stablecoins are making a significant impact is among smallholder farmers in Africa. They are using blockchain to secure credit, prove product provenance, and weather climate shocks.
Rob Downes, Head of Digital Assets at Absa CIB, revealed that institutional clients in Africa are already using stablecoins for settlement and liquidity management. However, they are not broadcasting it, suggesting a quiet revolution taking place behind the scenes.
The report also suggests that more Africans may transact in stablecoins than through bank accounts within the next 10 years. This prediction is based on factors such as increasing regulatory openness to stablecoins, the limitations of legacy banking infrastructure, and the demand for faster, cheaper, and more accessible payment solutions on the continent.
Key contributing factors include regulatory developments, banking infrastructure challenges, financial inclusion needs, technological trends, regulatory clarity and legislation, and Africa's unique position in digital adoption, a young population, and deep infrastructure gaps to solve.
While traditional bank accounts will continue to exist and serve certain demographics, especially in urban and formal sectors, stablecoins are poised to become a more prominent financial tool over the next decade due to their ability to overcome the banking sector’s existing limitations in Africa.
In South Africa, crypto assets have been classified as financial products, and crypto asset service provider licenses and on-chain transaction monitoring rules have been introduced. This regulatory clarity is expected to attract more investors to the country, which already boasts a stable financial infrastructure.
Shamba Records, a CV VC-backed agri-tech firm in East Africa, is using blockchain to help over 30,000 smallholder farmers build verifiable yield data, gain access to insurance, and increase incomes.
The median blockchain deal size in Africa reached $2.8 million in 2024, twice the all-sector median and a 10% year-on-year increase. Seven African countries now offer full regulatory clarity for digital assets, while only five enforce outright bans.
Nigeria's blockchain activity rebounded significantly in 2024, following a regulatory thaw. Africa, with its rising digital adoption, a young population, and deep infrastructure gaps, is uniquely positioned to shape the future of blockchain.
In conclusion, the Africa Blockchain Report 2024 paints a promising picture of stablecoins becoming an integral part of Africa's financial systems, offering a more inclusive, efficient, and accessible form of digital finance for millions of Africans.
- The growing potential of stablecoins in transforming African finance is being highlighted by the Africa Blockchain Report 2024, particularly in the agriculture sector, where smallholder farmers are using blockchain technology to secure credit, prove product provenance, and weather climate shocks.
- The regulatory landscape in Africa is evolving, with South Africa classifying crypto assets as financial products and introducing crypto asset service provider licenses and on-chain transaction monitoring rules, which are expected to attract more investors due to the country's stable financial infrastructure.
- Infrastructure gaps in Africa, coupled with its high digital adoption and young population, position the continent uniquely to shape the future of blockchain, as seen in the rebound of Nigeria's blockchain activity following a regulatory thaw.
- Businesses like Shamba Records, a CV VC-backed agri-tech firm in East Africa, are leveraging blockchain technology to help smallholder farmers build verifiable yield data, gain access to insurance, and increase incomes, showcasing the extensive reach and impact of blockchain in Africa's infrastructure and business sectors.
