UNDP Discusses Crypto’s Emerging Uses in Africa, Highlights Binance Charity’s Work in the Region
Main Takeaways
A recent report from UNDP, the UN’s lead development agency, suggests that digital assets hold great potential to help developing countries achieve sustainable development goals.
Crypto is already playing a pivotal role in aid disbursement, as shown by Binance Charity’s efforts in Africa and beyond.
Examples highlighted in the paper include the pilot of a stablecoin-based cash distribution system for refugees and microentrepreneurs in Uganda, as well as Charity’s effort to distribute $10 million worth of humanitarian aid for Ukraine.
The United Nations Development Programme (UNDP), the UN’s lead development agency focused on helping countries eliminate poverty and promote human development and sustainable growth, has recently published a paper discussing the potential of digital finance to advance a wide range of sustainable development outcomes in Africa.
UNDP analysts assessed digital assets’ potential and already effective benefits in domains like cross-border trade, remittances, hedging against inflation, and enabling innovative ways of funding the preservation of Africa’s diverse natural ecosystems. The paper also sets forth a number of policy recommendations for countries to better leverage blockchain-powered financial innovation toward achieving sustainable development goals.
Tangible benefits
Africa has been hit hard by the recent global health, climate, and political crises, which have all contributed to widening inequalities between developed and developing countries and the wipeout of many years’ worth of development gains. At the same time, the UNDP report argues, the COVID-19 pandemic highlighted the potential of the rapidly growing digital finance sector to provide relief to vulnerable populations and help countries promote sustainable growth.
Specifically, in Sub-Saharan Africa, where the majority of the population remains unbanked, cryptocurrency-based services are already making a difference in terms of improving financial inclusion. Digital assets facilitate access to financing and lower remittance costs, which significantly helps post-pandemic recovery. Cryptocurrency payments also enable faster movement of money along the supply chain, boosting the efficiency of cross-border trade and allowing businesses to access liquidity faster.
On the humanitarian front, which remains crucial to developmental efforts on the African continent, digital assets and particularly stablecoins are instrumental in supporting cost-effective aid disbursements. In this context, the paper highlighted the joint initiative of Binance Charity and Mercy Corps that piloted fast, low-cost cash transfers to support more than 2,200 South Sudanese refugees as well as micro-entrepreneur households in Uganda’s Yumbe District. The program relied on a stablecoin pegged to the Ugandan shilling. UNDP experts also made a note of Binance’s humanitarian efforts outside of Africa, particularly noting the efficient distribution of $10 million worth of aid for Ukraine.
Other benefits that the paper mentions include digital assets’ capacity to protect African households from historically high inflation, as well as underpin an innovative financing model for NGOs to collect donations in support of preserving the continent’s biodiversity.
Policy recommendations
The UNDP report observes that the continent’s regulatory landscape is characterized by a high degree of uncertainty. The authors articulate several considerations that African policymakers could use to ensure that cryptocurrencies are adequately regulated while their sustainable development potential is fully realized. The recommendations can certainly be replicated globally, through risk-based approaches that enable innovation.
Key points include:
Investment in digital infrastructure and payment systems.
Enhancing digital and financial literacy and risk education for citizens with equality and inclusion in mind.
Implementing existing global regulatory standards around digital assets and adapting them to country-specific contexts: UNDP experts maintain this will also go a long way toward creating robust regulatory frameworks in Africa.
Clear tax rules: with a focus on a cost-benefit analysis for adoption. This will benefit both users and governments.
Further testing of potential use cases through pilots and experimentation in fintech-related regulatory sandboxes.
Binance’s commitment to sustainable development
UNDP’s paper discusses two domains that Binance sees as its core priorities: improving people’s lives by advancing financial freedom and inclusion, and promoting reasonable regulatory frameworks around digital assets that will protect users without stifling financial innovation. We also agree that education is central to achieving both goals.
To that end, in 2022, Binance Charity donated $3.5 million to fund over 290,000 hours of Web3 education and training courses. This year, this effort is only picking up steam, as Binance’s philanthropic arm committed funds to support at least another 30,000 Web3 scholarships in partnership with top academic and vocational institutions. The projects are active in many countries, including Australia, Brazil, Cyprus, France, Germany, and Ukraine, and have a core focus on the African continent. Just last week, Binance Charity awarded 12 month-long, intensive tech education scholarships to 1000 young adults representing 19 countries across Africa.
Binance Academy, too, will continue expanding access to free blockchain education both online – by launching new courses and publishing new educational materials – and offline, through new partnerships with universities around the world.