Nigeria Ranked Second Globally in Crypto Adoption Index

Nigeria in the Sub Saharan Africa region has been ranked second in the world in global crypto adoption index and the country has received approximately $59 billion in cryptocurrency value between July 2023 and June 2024.

Nigeria’s crypto activity is largely driven by smaller denomination retail and professional sized transactions, with around 85% of the value of transfers received under $1 million.

The other countries in the region that made the top30 in the index are Ethiopia (26), Kenya (28), and South Africa (30), according to a latest report from Chainalysis, the American blockchain analysis firm.

Excerpts from its upcoming 2024 Geography of Cryptocurrency Report, Chainalysis said that Sub-Saharan Africa accounted for the global cryptocurrency economy’s smallest share, representing 2.7% of transaction volume worldwide between July 2023 and June 2024, reflecting the region’s smaller aggregate gross domestic product relative to other regions.

Nonetheless, Sub-Saharan Africa saw modest growth, receiving an estimated $125 billion in on-chain value during this period, a $7.5 billion increase compared to last year, the report said.

Sub-Saharan Africa is also leading the world in DeFi adoption, likely driven in part by a growing need for accessible financial services in a region where only 49% of adults had a bank account as of 2021, according to the World Bank.

“Drawing on its position as a frontier for financial innovation and inclusion, the region is emerging as a global model for how crypto can drive real-world impact, especially in areas underserved by traditional financial systems,” the report said.

Role of Stablecoins

Stablecoins, which account for approximately 43% of the Sub Saharan Africa’s total transaction volume, have become a key element of the region’s crypto economy as in countries where local currencies are highly volatile and access to US dollars is limited, dollar-pegged stablecoins like USDT and USDC have gained traction, offering businesses and individuals alike a reliable way to store value, facilitate international payments, and support cross-border trade.

Stablecoins are also playing a major part of Nigeria’s crypto economy, accounting for approximately 40% of all stablecoin inflows in the region, by far the highest in all of Sub-Saharan Africa.

Chris Maurice, CEO and Co-Founder of Yellow Card, one of Africa’s leading crypto-asset exchanges, which operates across 20 countries on the continent, said that about 70% of African countries were facing an FX shortage, and businesses have been struggling to get a cess to the dollars they need to operate.

“Stablecoins provide an opportunity for these businesses to continue to operate, grow, and strengthen the local economy. They are a proxy for the dollar and if you get into USDT or USDC, you can easily swap that into hard dollars elsewhere.” Maurice explained.

Ethiopia’s Market Growing Fast

Ethiopia, Africa’s second-most populous nation with 123 million people, is now its fastest-growing market for retail-sized stablecoin transfers, with 180% in growth, year-over-year.

The birr (ETB), Ethiopia’s local currency, shed 30% of its value in July after the government eased currency restrictions in a bid to secure a $10.7 billion loan from the IMF and World Bank. This loss in value will likely fuel further demand for stablecoins.

For many African businesses, accessing stablecoins through platforms like Yellow Card offers an alternative to traditional financial institutions (FIs) that are unable to meet their demand for US dollars.

This reality has made stablecoins indispensable for companies involved in international trade. From small-scale importers buying goods overseas, to large multinational corporations importing raw materials from Europe — stablecoins are facilitating transactions that would otherwise be stalled due to currency shortages.

Beginning in late 2023, stablecoins have experienced sustained growth in South Africa’s local exchanges — over 50% month over month in October 2023. Stablecoins have displaced bitcoin as the most popular cryptocurrency received in recent months, the report said.