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Africa Embraces Crypto Currency and Decentralized Finance To Combat Debt!

Recently, there has been an increase in the use of cryptocurrency, decentralized finance (DeFi) applications and DeFi services in several countries.

These innovations facilitate the delivery of financial services using smart contracts. DeFi encompasses all financial services that are built on public blockchains, based on open protocols and removes intermediaries from the financial intermediation process. There is significant cryptocurrency activity in Africa while DeFi developments are relatively new and unpopular in the African continent. This chapter introduces DeFi in Africa. It presents some statistics and data on DeFi in Africa. Thereafter, the potential benefits, challenges and regulatory issues associated with DeFi in Africa are presented.

Method: This study used literature reviews and external data sources to show the benefits and advantages of DeFi .

Findings: The findings show that there is low interest in DeFi in Africa. Some benefits of DeFi to African countries include increased liquidity for many small- and medium-scale enterprises (SMEs), new opportunities to raise additional capital to fund capital-intensive activities, usher in an era of smart contracts that are negotiated bilaterally without needing an intermediary, encourage peer-to-peer trade between economic agents in several African countries, enhance the efficiency of the Pan-African Payment Settlement System and encourage more trade between individuals and corporations under the African Continental Free Trade Agreement, among others.

One-quarter of countries in sub-Saharan Africa formally regulate crypto. However, a-third have implemented some restrictions and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto. Zimbabwe has ordered all banks to stop processing transactions and Liberia directed a local crypto startup to cease operations until it can be further studied. As so many in Sub-Saharan Africa are unbanked, crypto offers transparent peer-to-peer transactions without the need for an intermediary such as a traditional, centralized financial institution. Crypto holds the key to the vault. This is why it concerns nations with a vested interest in keeping Africa poor and disenfranchised from the global market place.

With crypto transactions peaking at $20 billion per month in mid-2021. Kenya, Nigeria, and South Africa had the highest number of users in the region. Many people use crypto assets for commercial payments.The use of blockchain technology and programmable money for economic activity can improve the functioning of the African Continental Free Trade Area. Central bank digital currencies can be backed by blockchain technology and can serve as a global, interoperable economic identity. Tokenization of assets such as land and mineral rights can be made possible using protocol use and blockchain technology. The use of blockchain technology can be used to enable peer-to-peer economic activity in Africa.

The Central African Republic is the first country in Africa, and the second in the world after El Salvador to designate Bitcoin as a legal tender. The measure has put the country at odds with the Bank of Central African States (BEAC)—the regional central bank that serves the Economic and Monetary Community of Central Africa (CEMAC), which the Central African Republic is a member of—and violates the CEMAC Treaty. BEAC’s banking sector supervisory body—Central Africa's Banking Commission—has banned the use of crypto for financial transactions in the CEMAC region. Yellow Card is the largest centralized cryptocurrency exchange in Africa. For its nearly 1.4 million users across the continent, Yellow Card – which offers an experience similar to Block's Cash App – is a vital lifeline to money.

The challenges of the traditional financial system in Africa are a significant barrier for innovation. The centralized system cannot accommodate new technologies as rapidly as fintechs can. A decentralized financial system is a promising alternative to the centralized system and can help Africa leapfrog the process of financial development. Today, decentralized finance has come a long way from its status as a buzzword among computer geeks. It has the potential to unlock a whole new industry within the African financial ecosystem.


In Africa, many adults are banking with Savings and Credit Cooperative Organizations, which are based on trust and lack the extensive documentation required for traditional financing. These organizations provide quick access to money but also charge high interest rates. The technology behind decentralized finance could change the way Africans bank and enable access to financial products for all. Blockchain-based smart contracts could thrive in decentralized finance and help African citizens gain financial access. This growth of the middle class would then threaten puppet leaders who work solely on behalf of foreign interests at the detriment of their countrymen!

Bitcoin was the most popular coin in Africa in Q1 2023 followed by WikiCat and CoreDAO. Regarding the global distribution of cryptocurrency users, Nigeria is the only country from Africa in the top 20 of users on CoinMarketCap in Q1 2023.


Ozili, P.K. (2022), "Decentralized Finance and Cryptocurrency Activity in Africa", Grima, S., Özen, E. and Boz, H. (Ed.) The New Digital Era: Digitalization, Emerging Risks and Opportunities (Contemporary Studies in Economic and Financial Analysis, Vol. 109A), Emerald Publishing Limited, Bingley, pp. 3-11.

Publisher: Emerald Publishing Limited

Copyright © 2022 Peterson K. Ozili

1. Coin Base Ventures

Coinbase Ventures is a part of Coinbase that invests in blockchain and cryptocurrency companies when they are just starting. Since its establishment in 2018, CB Insights investment data shows that Coinbase Ventures has participated in 297 deals and backed 277 start-up businesses worldwide through June 2022.

They make investments across many areas, including layer one protocols, Web 3 infrastructure, centralized on-ramps, decentralized finance, NFTs, metaverse technologies, developer tooling, and more.

2. The Baobab Network

The Baobab Network is an accelerator explicitly created for Africa. It helps African businesses in their early stages by giving entrepreneurs $25k in funding and a global platform to help them grow.

Since it started in 2015, the Baobab network has invested in 25 startups. Lendha, Good Talent, sidebrief, Mighty Finance, and Opus Analytic.

3. Digital Currency Group

The Digital Currency Group is a venture capital firm that invests in the market for digital currencies. It is situated in Connecticut’s Stamford. The corporation includes five companies: Grayscale Investments, CoinDesk, Foundry, and Foundry Genesis.

So far, the Digital Currency Group has backed up about 256 companies. On September 9, 2022, as part of their Seed VC, they made their most recent investment in Kwil.

4. Block Ventures

Block Ventures is a venture capital firm that invests in decentralized applications (dApps), initial coin offerings (ICOs), and other areas related to blockchain. They have put money into some of the most essential and profitable blockchain technology companies, from the start-up stage to the growth stage. Some of its African crypto investments include Mazzuma, HouseAfrica, CARMA, Pravica, and Monero.

5. Arbi Khodagholian

Arbi Khodagholian is a venture capitalist and Block Ventures’ founding partner. Arbi is solely committed to investing in the crypto and blockchain technology sectors. Since 2013, Arbi has put money into blockchain technology startups that are on the cutting edge and into creative entrepreneurs who want to push the limits of what is possible.

Arbi Khodagholian has made six start-up investments since its founding, and Monero, a decentralized cryptocurrency created by an African, is one of them.

6. Pantera Capital

Pantera Capital is an American hedge fund with a focus on cryptocurrencies. According to AUM, it is the biggest cryptocurrency hedge fund in the world. It introduced its Bitcoin-specific investment fund in the US in 2013. Pantera managed $5.6 billion worth of assets as of January 2022.

In its most recent funding round, Pantera Capital gave money to the African cryptocurrency exchange According to CEO Farzam Ehsani, raised $50 million, the most significant sum ever raised by an African cryptocurrency company.

7. CMT Digital

CMT Digital is a venture capital firm that works in the blockchain and crypto asset industries. It is a division of the CMT Group and focuses on investments in blockchain technology and the trading of digital assets.

CMT Digital Ventures has put money into 96 companies. Nestcoin, VALR, and Volt Capital are three African cryptocurrency companies that CMT Digital Ventures has invested.

8. Launch Africa

Leading Pan-African Venture Capital Fund, Launch Africa has made significant multimillion-dollar investments in African startups.

Over $24 million has been invested in Launch Africa’s portfolio companies by more than 238 private and institutional investors from more than 40 countries. According to the organization, it has supported over 100 startups, such as House Africa.

9. Azure Ventures Group

Azure Ventures Group is a venture capital fund that invests in and accelerates early-stage technology-focused businesses. It was founded in 2020 and is headquartered in Los Angeles, California.

Since its inception, it has founded five startups, which include African crypto projects such as Ripple and Mara.

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