Here’s what’s happening in Web3 across Africa

Whatever you prefer to call it – crypto, blockchain or Web3 – this new segment of the digital economy is booming across Africa. If you have slept on the sector, now is a good time to wake up.

Why? According to research firm Chainalysis, Africa’s crypto market rose in value by more than 1,200% between July 2020 and June 2021. Led by particularly high adoption rates in Kenya, South Africa, Nigeria and Tanzania, Africa had the third fastest growing cryptocurrency economy worldwide in that period. And that’s not all. Chainalysis also found that Africa is a world leader in the share of total crypto-transaction volume coming from peer-to-peer, an indication that African consumers in crypto-unfriendly jurisdictions are increasingly finding solutions to explicit and implicit prohibition.

Along with the overall growth in cryptocurrency trading and transactions across Africa, the last 12 months have seen an accelerated pace of activity across the continent from blockchain networks / protocols, venture capital firms, grant funders, governments and more.

Related: Cryptocompanies are ignoring Africa at their peril as a continent ready for major adoption

Blockchain networks / protocols

It seems that leading blockchain networks are announcing new Africa-focused initiatives every day. Ethereum, Cardano, Stellar, Celo and others appear to be actively seeking a position in the race to build and shape Africa’s new Web3 economy in the last twelve months alone.

The Ethereum Foundation committed resources to an insurance program with over 6 million farmers in Kenya.

The Stellar Development Foundation announced several initiatives, including a partnership with the African unicorn Flutterwave to launch new Europe-Africa remittance corridors, an investment in a Nigerian remittance platform, blockchain bootcamps for African startups and a $ 30 million matching fund that has already invested in Afriex, an Africa-focused company with users across Nigeria, Ghana, Kenya and Uganda.

Celo Foundation announced some own initiatives, such as a partnership with a Burkina Faso startup to launch a stablecoin that tracks the value of the CFA franc, a partnership with Mercy Corps Ventures for a pilot project in Kenya to promote financial inclusion among concert workers, equity-free grants for a number of African projects as part of their Wave IV Grant Program, support for various early African companies through the Celocamp boot camp and a Founders in Residence program where Africa-focused founders accounted for 40% of the first year.

Related: ‘We do not like our money’: The story of CFA and Bitcoin in Africa

And Cardano was also busy across the continent. Cardano CEO Charles Hoskinson toured African countries from South Africa to Egypt and outlined Cardano’s vision for the continent, Cardano’s Africa-focused commercial arm EMURGO Africa was established in Kenya with plans to invest $ 100 million in over 100 pre-seed blockchain startups within three years, EMURGO Africa announced investments in Adanian Labs and Adaverse, and Cardano announced a partnership with Kenya’s Pezesha to build a “peer-to-peer financial operating system.”

Venture capital investment

In addition to increased activity from blockchain protocols, the last twelve months have also seen an increase in fundraising from startups that utilize various blockchain protocols to help individuals, businesses, and other entities participate in the Web3 economy.

On / off ramps, which act as a bridge between the traditional economy and the new Web3 economy, were among those that attracted the attention of investors. Fonbnk raised an oversubscribed seed round to build the easiest way for millions of Africans to access digital assets – simply by using prepaid airtime. And Canza Finance, a disaster driven by a network of physical agents, also raised funding recently.

Stock exchanges and wallets that allow users to buy and sell cryptocurrencies have also seen increased fundraising over the past twelve months. Examples include VALR ($ 50 million Series B), Cowrie Exchange, Yellow Card, VIBRA (Africa Blockchain Lab), Busha, OVEX, Ejara, Bitmama and Revix.

Infrastructure providers that make it easy for others to build cryptocurrencies also attracted the attention of investors. Among them were LazerPay, KotaniPay, Payourse, Flux, Emtech and others.

Similarly, blockchain-enabled services utilizing blockchain technology across a range of application cases also received their fair share of venture capital funding over the last twelve months. Examples here include fundraising rounds of Pravica, HouseAfrica, KappaPay, SunExchange, Chekkit, OneWattSolar, Seso Global and others.

And lending-related services should not be left out as people like Goldfinch, NFTfi and others also raised venture capital over the last year.

Finally, studios, superapps, and other platforms with broad Web3 missions have also caught the eye of global investors over the past twelve months. See fundraises by Nestcoin, Africa Blockchain Center and Jambo as among the most important examples here.

Related: Venture capital vs. crypto, blockchain, DAOs and Web3

In addition to the Web3-focused players above, some startups in other sectors also announced that they intended to use revenue from recent fundraisers to implement or explore Web3-related projects. For example, Carry1st, an African mobile game publisher, identified that “game content [is increasingly starting] to integrate with NFTs and cryptocurrencies, “according to its CEO, revealing that it will therefore use part of the capital from its latest fundraising round to explore Web3 play-to-earn games.

Another example is the African fintech unicorn Chipper Cash, which recently closed a significant fundraising round that brought the global cryptocurrency derivatives exchange FTX on board as an investor. FTX’s CEO, Samuel Bankman-Fried, stated that part of the goal of FTX’s investment in Chipper Cash is to “accelerate the adoption of crypto in Africa and beyond.”

Based on the recent fundraising activity examined above, combined with broader market trends, it is clear that exciting times lie ahead for Web3 founders and funders across the continent.

Partnerships and grants

But blockchain networks and venture capitalists are not the only ones attracted by the opportunity to shape Africa’s new Web3 economy. Various NGOs are also eager to explore the opportunity that Web3 provides for influence across the continent.

For example, Mercy Corps, a not-for-profit humanitarian organization, recently launched a $ 1 million Crypto for Good fund to support blockchain-based projects that promote financial inclusion in Africa and other emerging markets. Similarly, the UNICEF Innovation Fund, a UN financial tool focused on technology for the world’s next billion users, makes share-free investments in cryptocurrencies of up to $ 100,000 in startups across Africa (and other UNICEF program countries) that develop blockchain . -based solutions that “have the potential to benefit humanity.”

Even former Twitter boss Jack Dorsey and global rap superstar Jay-Z joined the action over the past twelve months. They established the Bitcoin Trust Fund, a 500 Bitcoin (BTC) vehicle, and appointed four Africans to its board to help define how the fund will be managed – presumably this will include a significant focus on the African continent.

Related: No, Jack Dorsey, venture capital will not run Web3

In addition to grant funding, a number of other indicators also point to the traction that Web3 is experiencing across the continent. For example, Quidax became the first African cryptocurrency exchange listed on CoinMarketCap, without a doubt the leading authority for cryptocurrency data worldwide. And in addition to its investment in Chipper Cash, the cryptocurrency derivatives exchange FTX also announced a partnership with AZA Finance to the great fanfare of building infrastructure that connects African markets with the global Web3 economy and more.

African governments and the Web3 economy

Although the potential effects of business partnerships, NGOs, venture capitalists and blockchain protocols should not be underestimated, the government remains an important player that can stimulate or prevent the emergence of Africa’s Web3 economy. So far, however, it seems that governments across the continent generally see cryptocurrencies with a healthy dose of skepticism.

The Nigerian government is an example. In February 2021, the country’s central bank issued a note – an act that created some chaos in the country and undoubtedly drove users underground, away from formal cryptocurrency exchanges and into peer-to-peer transactions – and noted:

“Trading in cryptocurrencies or facilitating payments to cryptocurrency exchanges is prohibited” for regulated financial institutions under its responsibility. The Central Bank of Nigeria also required financial institutions to “identify persons and / or entities trading in [cryptocurrency] … and ensure that such accounts are closed immediately. ”

While Nigeria is illustrative, it is hardly unique. In fact, according to the US Library of Congress, November 2021 cryptocurrencies were banned, explicitly or implicitly, in about half of all countries in Africa.

Worth noting here are the words of the renowned University of Nairobi Professor of Entrepreneurship Bitange Ndemo:

“Blockchain technologies are the future, and any attempt to ban them – or even excessively intervene in their operations – would face the same fate as other state attempts to limit behavior.”

Nevertheless, despite a somewhat hostile, or at least skeptical, stance on cryptocurrency trading and ownership in many countries across the continent, an increasing number of governments have been more open to other uses of blockchain technology, especially the digital currencies of central banks (CBDCs).

Nigeria launched its e-Naira in October 2021, South Africa participates in Bank for International Settlements’ multi-CBDC experimental project Dunbar, and Morocco, Tunisia, Ghana, Kenya, Rwanda, Madagascar, Mauritius and most recently Uganda are all active digital currency research supported of their respective central banks.

Related: What is a CBDC? Why central banks want to get into digital currencies

As more governments across the continent explore blockchain-based solutions, albeit limited to CBDCs, there is a perception that they will increasingly develop a more informed approach to the Web3 economy along with policy frameworks that are more in line with the needs of everyday users. While this remains to be seen, such optimism is welcome.

Web3 future for Africa

All over the world, the new Web3 economy is giving birth to countless opportunities, and the implications for the African continent are massive. We are on a mission to leverage the latest blockchain technologies to provide real value to billions of unbanked, underbanked and underserved individuals across Africa and other emerging markets, and we are excited to see various blockchain protocols, startups, investors, funding financiers and governments interested in doing the same. Given the current situation and the pace of innovation across the continent, it is clear that the future of Web3 in Africa is bright.

The author thanks the team at Intellence for their editorial assistance with this article.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Michael Kimani is the co-founder and leader of growth at Fonbnk, the platform that makes it easy for millions of users in Africa and other emerging markets to participate in the Web3 economy simply by using their prepaid airtime.