In Africa, repressive governments and arbitrary monetary policies by the Central Banks are pushing many towards decentralized finance. Last month, Nigeria ranked behind the United States as Bitcoin’s 2nd largest market globally. The immediate cause? Nigeria’s Government froze several accounts after the #ENDSARS protests, even before obtaining court orders to do so. Other remote causes include the fragile fiscal and monetary policies of Nigeria’s Central Bank.
Away from Nigeria, a sizable proportion of Africa’s mainly young population are moving away from fiat to crypto. They are embracing decentralized finance (DeFi) to exchange and store up assets. Many have made fortunes from crypto trading and HODL.
Recognizing these emerging trends, Charles Hoskinson, Cardano founder, has predicted that Africa will be the face of decentralized finance in 3 years. This, he says, will be the case as Africa will bring 100 million users into that space by 2024. According to Hoskinson,
“Africa has enormous market potential for DeFi, and I strongly believe the decentralized finance sector will tap into the continent’s market potential. Who is actually going to do peer-to-peer loans? Peer-to-peer insurance? Who’s going to do peer-to-peer payments? I have news for you, not a guy living in New York.”
Africa as the Launchpad for Decentralized Finance
Hoskinson also noted that stricter regulations in the West make it difficult for crypto innovation to thrive. Conversely, the more relaxed framework in Africa is the perfect climate for decentralized finance. This places Africa ahead on the curve. Cardano, the decentralized finance outfit founded by Hoskinson, is ready to lead the charge. It plans to forge strategic partnerships to make Africa the face of the sector. Commenting on the reason for his predictions, he said,
“There’s no JPMorgan Chase. There’s no big massive legacy financial system that dominates and controls. Ultimately, DeFi can create liquidity for the poorest people in the world and allow them to build wealth and protect the wealth that they’ve gained”.
Challenges to Hoskinson’s Predictions
Although Africa is in an excellent position to become ahead in the decentralized finance sector, most of its population remains ignorant about how this financial system works. Getting Africa ahead of the curve will require a lot of advocacy. Hoskinson says Cardano is ready to offer a helping hand. “We built Cardano for this purpose,” he said.
You can watch his interview here