How Bitcoin is Solving One of Africa’s Biggest Problem (Part 1)

Osiri and her peers are embracing some of Bitcoin’s most controversial features and virtues of privacy and decentralization, to stick it to the man and turn it into fortunes.

It took a white man, CEO of Twitter Jack Dorsey, to point out one of the most powerful, yet underrated stories coming out of Africa, when he said “ Africa will define the future of Bitcoin.”

I am here to tell you that story. 

After years of poor governance and corruption, time has now caught up with Africa’s states. They are unable to generate enough job opportunities for the millions of digital native Africans that spend 6 hours everyday glued to their whatsapp, tik toks, selfies and hyper localized memes.

Half of their time is spent on smartphones and the other half out in the real world looking for any way to make a dollar. It is hard out here. No jobs. That’s all that matters.

In the midst of the digital economy that is taking root in Africa, Bitcoin , a rare, radical, anti-central bank digital asset has found its way into the hands of thousands of young Sub Saharan African digital native, like Osiri.

Osiri and her peers are embracing some of Bitcoin’s most controversial features and virtues of privacy and decentralization, to stick it to the man and turn it into fortunes.

Despite multiple warnings by African Central banks, and an embargo by banks and Mpesa imposing sanctions on Bitcoin & cryptocurrency exchange services, informal networks of virtual currency dealer in Kenya, Ghana, Nigeria and South Africa continue servings millions of dollars worth of demand, in ways that resemble the trading ways of their ancestors.

In the decentralized digital economy, trade of Bitcoin flows free, unhindered.

But while the rise of this decentralized digital economy is creating opportunities for the bulging youth populations of Africa’s economies, it is running up against the old power structures that will go to great lengths to maintain the status quo.

This is part 1 of a 2 part series on how bitcoin is solving one of Africa’s biggest problems.

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How Corona Virus in Kenya is Affecting Mpesa Revenues Post Covid19

Mpesa’s inextricable link with Kenya’s informal sector means its fully exposed to the impact of Coronovirus on biashara.

It’s fair to say Kenya’s predominantly informal sector is currently under shock, due to the impact of the rona and the measures and mitigations that have followed: quarantines, social distancing rules, curfews, restrictions and possibly lockdowns.

Mpesa’s inextricable link with Kenya’s biashara economy fully exposes it to this shock. Newly appointed CEO Peter Ndegwa of Safaricom and M-Pesa admitted to Reuters , that the mobile payments darling of Africa and East Africa is fully dependent on the economy of Kenya.

It has only been a month of subdued biashara, but the new Mpesa CEO already expects a 7.3% decline in Mpesa revenues of upto $52 million this quarter. 

Unless a vaccine or cure can be found, and a resumption to the biashara economic levels to Pre-Covid19, Mpesa revenues are likely to be worse than this first quarter for the forseeable future.

Here is why

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How the Young Somali Hawaladars of Little Mogadishu are Shaping the Future of Bitcoin in Africa (Part 1 of 2)

Youthful Somali hawadalars from East Africa are complementing an age old informal financial practice with an odd piece of a new digital resilient tool – bitcoin.

This article is Part 1 of a 2 Part Series

The importance of informal finance arrangements is a reverberating theme across Africa. Informal doesn’t necessarily mean bad or evil or dirty, it’s just that rather than rely on the heavy hand of the law, some communities prefer to place their trust in reputation and social networks for all trade commerce and financial relationships whether offline or online.

Others, will turn to informal institutions of trade and finance when faced by adversity in an immediate harsh environment such as war, political instability, structural programs or lack of reliable services.

For example, the Igbo traders in Nigeria pulling on social networks to scale resilient informal enterprise in the face of political instability in Nigeria. 

The early airtime currency traders of Africa who gave birth to mobile money like Mpesa tapped into the power of networks to fill a money remittance gap using an odd piece of technology.

Today, the peer to peer Bitcoin traders of Kenya are bypassing an embargo by banks to meet demand for bitcoin by leveraging informal bitcoin trading networks based on trust and reputation.

It is all there.

One of the best case studies is of the Somali people, during post black hawk down cold war of Somali in the 90s by Peter D. Little. 

Set in the early 2000s post war Somalia, his stories tells of the resilience of trade of livestock across the whole of East Africa despite the collapse of central government and no functional system. 

The Ethiopia Somali Kenya cattle trade flourished in spite of the failed state conditions, on the back of trust network built on kinship. Through informal financial instruments and contracts of exchange and trade, they were able to sustain demand in Nairobi, forming a key trading corridor network in the Horn of Africa

In the post digital, post mobile world of 2019, the Somali people of little Mogadishu are under a different kind of threat on their digital financial lives.

Digital financial surveillance is underway in Kenya as part of tax reforms by revenue authorities including mandatory monitoring of electronic transactions and taxes on the digital economy.

Kenya is under pressure to reform after taking on too much debt to fund infrastructure projects that haven’t quit materialized as planned. An economic slow down, high youth unemployment rates and the weight of repayments on sovereign debts are some of the symptoms of the times. Some commentators have likened the impending state of the times to the Structural Adjustment Programs of the late 80s to 90s which shaped much of what is today’s informal economy.

As we shall see, the Somali people are some of the most sensitive to threats of erosion capital. It is in their blood, a natural instinct to respond to invasive threats to wealth such as hawala networks to bypass strict capital controls.

This got me thinking, how will the Somali people weather a period of heavy monitoring, high scrutiny and low trust?

The the answer lies in Eastleigh, a bustling business district in one of East Africa’s capitals, Nairobi. Here, youthful Somali hawadalars are complementing the old informal financial practices with an odd piece of a new digital resilient tool – bitcoin.

While there is no war today, times are similarly tough, the only difference is that is all mostly digital.

This is Part 1 of a 2 Part Series on how the young Somali Hawaladars of little Mogadishu are shaping the future of bitcoin in Africa

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How Nokia and Prepaid Airtime Fractionalization Gave Rise to Africa’s Digital Economy: Guest Post by Niti Bhan

What can we learn about the digital society emerging in Africa without the trappings of legacy infrastructure and institutions?

3 seemingly unrelated events in different parts of the world in the early to mid 90s converged, to culminate in the perfect storm  – what we now call Africa’s Rising digital economy.

One was in the mid 1990s, in a small city in northern Finland, where engineers and designers began work on the product development of a mobile phone that would eventually become one of the best selling Nokia models ever – the 3310, released in Europe and the Far East in the year 2000. The continent of Africa was not yet on their radar as a target market and Nokia’s impact on sub Saharan Africa, as well as its iconic success for its legendary durability was still some years in the future.

The second event was around the same time, in 1994 – 1995. Portugal Telecom’s mobile telephony division TMN, invented the prepaid business model whilst researching ways to lower barriers to credit services, and thus reach a wider audience. They too, were not thinking about the farmers, traders, or biashara vendors on the African continent, for whom the prepaid plan would turn out to be a godsend, matching their needs for flexibility and control over the timing and amounts spent on cellular services. This, too, was still a handful of years in the future.

The third is the liberalization of African state owned monopolies such as in telecommunications in the mid 1990s which opened the doors to private sector operators in cellular telephony, and thus, to competition.

These 3 events would prove to be a fertile time for the perfect storm and the firm foundation on which today’s African digital economy thrives.

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Why Africans are not Just Passive Recipients of Technology

Should technology solutions aimed at the developing world, seek to build on and enhance indigenous, activities — economic or otherwise — or, where necessary, is it okay just to replace and lose them?

By Ken Banks

In Ghana, it’s popularly known as Susu. In Cameroon, Tontines or Chilembe. And in South Africa, stokfel. Today, you’d most likely call it plain-old microfinance, the nearest term we have for it.

Age-old indigenous credit schemes have run perfectly well without much outside intervention for generations. Although, in our excitement to implement new technologies and solutions, we sometimes fail to recognize them.

Innovations such as mobile banking – great as they may be – are hailed as revolutionary without much consideration for what may have come before, or who the original innovators may have been.

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Why the Legacy of Uber’s App and Business Model in Africa will outlive the company

The legacy that Uber will leave behind in Africa’s mobile first decentralized digital economic ecosystem is the ability of a simple algorithm to collate disparate sources of demand for goods or services, and then redistribute them in the most efficient and productive manner among suppliers.

By Niti Bhan, 

As news of Uber’s possible decline and fall filters in, it behooves me to take a moment to ponder the implications for sub Saharan Africa’s digital economic ecosystem, particularly, the decentralized hybrid one emerging among the erstwhile informal sectors of the economy, such as motorcycle taxis like Safeboda and other on demand services.

While Uber itself has made waves in all the major urban metros across the African continent – Lagos, Nairobi, Johannesburg, etc – its inevitable end will leave a greater legacy than simply copycat taxi hailing services.

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