Original author: PATRICK MCCORRY
Original translation: TechFlow
I joined a trip organized by Borderless Africa, forming a small team with Yoseph Ayele, Songyi Lee, Jeff Coleman, Ye Zhang, Kartik Talwar, and Jacob Willemsma.
The trip took place between Kenya and Nigeria and lasted about 9 days.
In each country, we conducted the following activities:
Q&A and symposium;
Small circle discussions moderated by locals;
Developer education workshops.
In addition to these events, we also had the opportunity to meet founders and notable contributors.
This article represents my personal opinions and insights gained from those conversations. Highlights include:
USDT and Binance P2P are gaining popularity
Desire to earn money based on ability rather than location
What will the future hold?
Disclaimer: Each event invites locals to learn about Ethereum and second layer protocols. The audience attending these events is likely to have a strong interest in cryptocurrencies. While it may not be widely representative of today’s population, it could become mainstream in the future as cryptocurrency adoption continues to expand.
USDT and Binance P2P are gaining popularity
I asked the same set of questions at each event:
Who gets paid in cryptocurrency?
Who pays wages in local currency?
Who prefers to be paid in Bitcoin/Ethereum?
Who prefers stablecoins?
Who is actively using Binance’s P2P marketplace?
Across all activities, the responses from almost all participants were fairly consistent:
They used to receive their salaries in cryptocurrencies.
They prefer to be paid in the form of stablecoins, especially USDT.
They use Binance’s P2P marketplace to exchange stablecoins for local currencies (and vice versa).
There is not much interest in holding native crypto assets like Bitcoin or Ethereum. Moreover, participants prefer networks like TRON or Binance Smart Chain for transactions.
The reasons are: almost no fees and “speedy” confirmation times.
Binance is popular
While competitors like Onboard are emerging, almost all participants still rely on Binance as their preferred trading platform.
It was explained to me that Binance entered Africa around 2018 with the launch of Binance Labs. There was latent interest, but no initial intention to expand. Over time, Binance realized that Africans wanted exposure to stablecoins, and Africa became an important market for the company. I saw some locals wearing Binance clothing, but they had never worked for the company.
To me, the rise of USDT seems coincidental. In 2018, the stablecoin market had no competitors and Africa seemed to be following the broader market trend at the time, with USDT surpassing Bitcoin as the most liquid and most traded asset. I wish I had asked more questions about why I preferred USDT over USDC.
Cryptocurrencies represent a convenient way to access stablecoins
The rise of stablecoins cannot be underestimated. From an African perspective, stablecoins represent the most significant innovation.
It conveniently gives Africans access to US dollars:
Africans can bypass the local black market.
Africans no longer have to deal with the real dangers associated with the black market.
Africans can exchange at the broader market rate.
More importantly, there is no need to hide dollars under the mattress anymore, everything is digital. Of course, the work required to make stablecoins popular is not easy.
Some readers may be thinking: “Well, if I can just represent USD as an asset on-chain, then problem solved!”.
This is the first step in solving the problem. The broader issue is to create an online marketplace that can facilitate a liquid market between stablecoins and local currencies. This market must be able to exchange at a large scale and with minimal price slippage.
Why is this a real challenge? There are about 42 currencies in African countries. We need to foster a liquid market that can facilitate the exchange of all local currencies to stablecoins. This requires the joint efforts of many local players to achieve.
Thankfully, the cryptocurrency ecosystem is great at allowing participants to work together and provide liquidity to assets when it is truly needed.
So far this has worked well in Kenya and Nigeria. I don’t have the data to confirm this works for all 42 currencies in Africa.
Why choose stablecoins instead of crypto assets?
It may come as a surprise to many, but local currencies in African countries have been depreciating very quickly relative to the U.S. dollar. Some currencies, like Zimbabwe’s, have failed due to hyperinflation.
For example, since 2008:
The Nigerian Naira has lost 7/8 of its value against the US dollar.
The Kenyan shilling has depreciated by 50% against the dollar.
The depreciation of the Kenyan shilling is significant because during the same period from 2008 to 2023, Kenya’s GDP tripled. Despite economic growth, the currency continues to lose value. Confidence in the economy has increased, but not in the local currency.
There is no doubt that large swathes of the population in Kenya and Nigeria still live in absolute poverty.
For Westerners, especially the British, the concept of poverty is living in an apartment with social security (welfare) payments. Families do struggle to make ends meet, but they have a roof over their heads and access to healthcare. If homeless people are taken into account, there are about 271,000 people in the UK, which is 0.4% of the total population (about 67 million people).
An estimated 60% of Nairobi’s population lives in slums. Additionally, the World Bank estimates that around 50% of Nigeria and Kenya’s populations live in slums.
In the slums, an entire family may live in one room (a "studio"). Outside their homes is a small corridor that connects them to the main road. As we experienced, sewage flows through these small corridors like a race track full of obstacles. Many people live on less than $1 a day and receive almost no social benefits.
This is why the following statements are out of touch with reality for Africans, especially those living in slums.
“The real win is helping people understand why Bitcoin is the best long-term savings asset.”
I hate to criticize the above review but it is so out of touch with the real world situation and the reality that locals face.
I believe locals would love to have long-term savings goals, but they are desperate to address immediate expenses. For example, if they can’t pay the bills for any reason, the landlord might pay $10 to a group of young people to threaten the tenants to pay the rent.
Surprisingly, there are still landlords in the slums.
I don't believe stablecoins can help people living in slums. The solution is to create better market conditions for locals so they can build wealth, build better infrastructure, and get out of slums. I can understand that individuals might seek to work online and receive payments through cryptocurrency systems, but for many people living in these conditions, this is not a ready solution.
In other words, cryptocurrency systems are not yet relevant, except in exceptional cases, for about 50% of the population in Nigeria or Kenya.
Africans using stablecoins are not living in slums. I imagine they have achieved some form of financial stability and are able to cover their near-term expenses.
The dollar is losing its spending power over time The cryptocurrency meme that we should keep all our savings in native crypto assets doesn’t mean much to them because it’s a foreign concept.
The opposite is true in Africa. The purchasing power of the dollar has only risen relative to their own local currencies. Holding dollars is a safer option than holding crypto assets in their own countries.
For Africans, the US dollar is very stable, which is why stablecoins have found product-market fit among them.
Demographics of conference attendees included:
Community leaders,
software developer,
Startup founder.
Desire to succeed amid discrimination and mistrust
The following questions and answers are from a gathering in Nigeria.
Who has questions about online payment providers like PayPal?
Everyone in the audience raised their hands and laughed among themselves.
In Africa (especially Nigeria), it’s common to be locked out of online service providers because of IP addresses that are considered suspicious. Some of us have also been locked out of our accounts.
The end result: Africans are excluded from the services provided by global fintech companies that we take for granted in the West.
Who has questions about KYC?
We are told that about 70% of Nigerians do not have passports.
The Nigerian government has developed a scheme called the National Identity Number (NIN) for identification and KYC purposes, but it has been embroiled in problems and delays.
On the other hand, the Central Bank of Nigeria operates a separate identity verification process called the Bank Verification Number (BVN). It acts as a unique identifier for users across all banking services. Only 25% of the Nigerian population (57 million people) have registered for the number.
Identity remains a difficult problem in Nigeria. This will affect the ability of companies to meet compliance requirements before sending funds to Nigerians. Whether it is cryptocurrency or other means, this identity issue needs to be resolved in accordance with the regulatory framework.
Who has missed an opportunity because they didn’t trust you?
This time no one laughed. Everyone raised their hands, which was thought-provoking.
If the reader can only take away one point, I believe this is why blockchain technology, and especially Rollup as a technology stack, is so important to our colleagues in Africa. It reduces the power dynamics between users and operators, enabling parties that wish to transact but have a mutual distrust of one another to do so in a secure manner.
In other words, it allows users to:
Locking funds into the operator's services,
Interact with the service,
Ultimately withdraw funds from the service without trusting the service operator.
We are able to define, measure, and reduce trust in financial interactions, and that’s what’s so special about crypto. I’ve been calling it the field of trust engineering.
I hope that one day the technology stack will be able to deliver the benefits of scale to our colleagues.
Allowing us to transact on their platforms, pay for their services, and most importantly, without having to worry about who they are or where they live.
What is the one thing we should tell Westerners about Nigerians?
One participant and some comments from others spoke in depth on this issue. I summarized the key points below:
"Nigerians are particularly hungry for opportunity. They are driven by incentives. Design the right incentive program and Nigerians will join. Nigerians have learned everything they know from the Internet. Give them a Nokia 3310 phone and they will use it as a tool to get somewhere.
They want to escape their local environment, work online and join the global workforce. They see blockchain as the great leveler. It enables them to be rewarded for their abilities rather than their location.
In Africa, less money is needed for projects to succeed. For every dollar spent in the US/Europe you get 1 point, but in Africa you get 1,000 points.”
as well as:
“If there are Nigerians in the project, there is money to be made. If there are no Nigerians, be careful.” - Kenyan local
I laughed at that, but it really showed their desire to succeed.
Web3 Bridge
Take a moment to imagine this:
You left your family and friends for 16 weeks, traveled thousands of kilometers, and lived with 40 other people (in bunk beds) to learn Web3.
Hoping for a chance to change my life.
This opportunity is to work online, earn income based on ability, and will not be discriminated against based on your geographic location.
This is Web3 Bridge.
Web3 Bridge is an educational project running for free since 2019.
The project attracts Web2 developers and aspiring programmers who want to learn how to get started in the Web3 industry.
We met one woman who had left her husband and three children behind to participate in the program. I imagine there were many others in that room who faced similar struggles, being away from loved ones for so long, and that courage is not to be underestimated.
The curriculum and topics covered are also impressive. It starts with basic concepts, like what is blockchain, to implementing your first Solidity (or Cairo) smart contract, to learning the full stack of technologies to implement Web3 applications.
Again, the entire program is free to attend, whether in person or online. We understand that Web3 Bridge’s continued existence relies on grants and personal investments (time and money) from the founders.
Currently, the physical facilities consist of a few houses, but founder Ayo told us about his dream. He wants to buy nearby land and open a larger campus. With a larger physical space, he can increase the size of the trainee group and teach hundreds of developers at a time.
I sincerely hope his vision comes to fruition and the crypto community should consider how to support Web3 Bridge.
What will happen in the future?
During my nine days visiting Kenya and Nigeria, I gained valuable insights that led me to some important conclusions about the future — about their workforces, the role that cryptocurrencies might play, and whether we (the West) can support their growth.
Africa is uniquely positioned to succeed
in my opinion:
Africans share the same time zone as Europeans.
They speak European languages fluently, especially English and French,
They have a strong desire for success and are eager to create wealth.
Africans are well positioned to compete online.
In the digital realm, if a worker is needed in a specific time zone and they are able to communicate in the same language, it may not matter if the worker is in Europe or Africa.
For me, the overall goal of helping Africans succeed is to:
Providing better cryptocurrency infrastructure to provide a reliable way to employ and pay Africans,
Reducing the key differences that distinguish Africans from Europeans in online communities,
Enable African developers to leverage cryptocurrencies as software stacks and remove the role of trusted service operators.
Long term: The two communities, Africans and Europeans, should become indistinguishable in the digital sphere.
Only in this way can Africans earn income primarily based on their own abilities rather than their geographical location.
Africans understand cryptocurrencies
Thanks to the internet and online communities, Africans are not isolated from the Ethereum community. We met the following teams and individuals:
The team building the Arbitrum project,
Participated in the ETHGlobal hackathon and won a prize,
Learn how to implement Cairo smart contracts on StarkNet.
Learn about Optimism's retrospective funding,
Eager to learn about zero-knowledge proofs.
Africans don’t need us in the West to visit them and preach about why they should care about Ethereum or the broader cryptocurrency ecosystem.
They have a huge NFT community.
Africans are already interested in cryptocurrencies, and the number of people interested is growing steadily.
How can we help Africa?
Africans don’t need our help in understanding how to use cryptocurrencies. If anything, we need their help in demonstrating use cases.
As outlined in this article, how conveniently Africans can use cryptocurrency to access dollars helps validate all the technology we are building. This provides indisputable evidence that cryptocurrency has product-market fit and that there are many people relying on it.
On the other hand, we need to better understand the challenges Africans face before participating in the online economy and launching their own cryptocurrency projects. Some of these challenges include:
Lack of government support.
Kenya has no cryptocurrency laws, but the government just confiscated WorldCoin’s hardware, saying it failed to disclose its true intentions. Nigeria prohibits banks from participating, but individuals can use it.
There was almost no venture capital.
Angel investing is possible but very rare. Identity issues make legal compliance difficult and can hinder raising funds.
There is no time to create.
The desire to succeed makes Africans very focused on building the next product. They don’t have the leisure time to simply tinker with technology for fun, which can affect their ability to come up with innovative new ideas.
Global views.
Westerners have misunderstandings about Africans’ capabilities and real needs. Africans can demonstrate their capabilities and value, but it takes all of us to amplify it.
Grant Programs in Africa
The solution that was raised again and again was the need for a grant program focused on Africa. I would like to make a few comments about the grant program, and these feedback are relevant for any program (not just those focused on Africa):
Grants should be given to projects and individuals who need them to advance progress.
Grants should be given to individuals who might benefit from tinkering with the time and gaining a better understanding of research-oriented ideas.
Grants can reduce risk at the pre-seed stage for venture capital firms.
Grants should not be viewed as a long-term source of funding, as it is easy to continue funding projects that are supposed to fail.
Grants should only be issued if there is clear proof of employment by the grantee.
Grants can be used to foster an environment, connect developers and grow a community that can share knowledge with each other.
Any grant program designed to work in Africa, or any geographic location, needs local leaders to run it. Grant managers can be paid to review and authorize grants. This could easily become a full-time role.
Most people, even outstanding local leaders, have no experience running or participating in grant programs. Like any system, it is best to start small and build over time. It is best not to hand over very large funding pools to brand new grant programs. Grant managers should have time to earn a reputation for how well they manage funds and demonstrate the impact of grants.
Grants are not the answer to local problems, especially in Africa. Funds are limited and can be easily exhausted. Be careful with how you spend them. Grants should be reserved for the most promising groups and individuals to advance their projects. It is "free" money, but it should not be widely available.
Uniswap is one of the biggest success stories for me. Founder Hayden received a $50,000 grant from the Ethereum Foundation to cover the audit costs. This was enough to cover the audit costs, drive progress, and make Uniswap the technology giant it is today.
It doesn’t take a lot of money to drive progress. Less is more.
Finally, two issues hinder the success of any grant program.
If Africans are unable to comply with KYC/AML rules, grants may not be provided to them.
A local network of venture capital needs to emerge that can later fund any success stories.
Both of these issues are structural and infrastructure issues that extend beyond cryptocurrencies. In particular, venture capital networks require former founders who are willing to invest and help a new wave of founders build large, sustainable companies.
On-site education
One thing that is lacking in Africa, but is abundant in the West, is field education.
In the West, there are a plethora of seminars, summer and winter schools to attend and learn about the core technologies that power cryptocurrencies. What’s more, many of these educational events are free.
Unfortunately, many Africans face restrictions when participating in cryptocurrency-related activities.
Many Africans lack passports, and even if they do, the need for visas and the potential burden of travel expenses present considerable challenges.
They can’t come to us in person.
As an experiment, Ye Zhang and I held developer workshops in both Kenya and Nigeria.
We were surprised by the number of software developers in attendance, and they asked a lot of great technical questions. There is a large pool of skilled developers in Africa who want to learn about the core infrastructure of Ethereum, as well as novel topics like zero-knowledge proofs.
Until now, they have relied entirely on the internet to learn, but it is best to meet with world experts face to face, not only from a learning perspective, but also to gain inspiration to pursue a subject, because experts tend to love their subject, and this intellectual love is contagious.
This brings me to my next step: we don’t really need a conference to pitch and market new Web3 projects to Africans. People are hungry for sharing knowledge and learning.
Our biggest contribution to Africans is organizing and conducting a live educational program. It's like a summer school - bringing in experts to teach technical topics.
Final Conclusion
There are several key points in the above article:
Cryptocurrency payments have become a convenient method for acquiring U.S. dollars.
Binance is popular in Africa due to its early expansion and facilitation of peer-to-peer marketplaces.
Africans want to earn an income based on ability rather than location, and they have the tenacity to pursue it.
The long-term goal should be to reduce the digital divide between Europeans and Africans.
Africans face many challenges, including lack of regulatory support, inability to travel, difficulty complying with KYC/AML regulations, few venture capital networks, and little time to try new ideas.
More importantly, almost all Nigerians raised their hands and admitted that they lost their chance because people did not trust them.
Web3 Bridge’s education program is doing important work, and the next step is for Western countries to help run summer schools themselves.
One impact of our visits was helping the community connect. Many of the participants didn’t know each other, especially the developers. It sounds like some of the local community leaders will try to continue organizing more events. As we visit more, we hope to help local leaders build a larger community.
There are two final topics I would like to discuss.
Africans love life. Although we have only been to Nigeria and Kenya, we have also met Africans from Uganda, Ghana and other countries. They have a good time joking about how Nigerians are dramatic or that they go to Ghana when they need to relax.
The locals were more than happy to teach me some interesting words like Mubaba, Alagba, m'soupa, which are compliments for men and women. I used them at every opportunity and most of the time they laughed, especially the Kenyans. They even told me that East Africans have round foreheads, while West Africans have flat foreheads.
As a programmer, it's easy to focus on the broader system and try to assess how it can be fixed for the benefit of everyone. However, we must never forget that at the heart of this system are people. It's always worthwhile to take the time to understand their customs, their humor, and fully appreciate what they give up to be able to be in the same room with the rest of us.
What is Africa?
One of the striking aspects of Africa is its immense cultural richness and how it influences the way Africans view the continent.
In West Africa, there is a Schengen-like agreement that allows visa-free travel between several countries. However, traveling from East Africa to West Africa (and vice versa) is uncommon and difficult. It requires a visa, is economically costly, and takes time. For example, the flight time from Lagos to Nairobi is about 5 hours, and a round-trip ticket can cost more than $600.
I noticed that East Africa and West Africa mutually recognize each other as an important part of African identity. On the other hand, they do not consider South Africa or North Africa to be "African" in the same way. South Africa is considered more European, while North Africa is more Islamic.
This sentiment is reflected in the fact that at least no one I asked had ever been to Algeria, nor expressed any desire to go there. This is interesting because my stepfather grew up in Algeria and he very much considers himself African. I don’t have a good opinion on this. I imagine it has to do with cultural differences and Africa’s colonial history.