Decentralized Finance and Cryptocurrency Activity in Africa

This paper presents a discussion of decentralized finance in Africa. It presents some statistics and data on decentralized finance in Africa. Thereafter, the potential benefits, challenges and regulatory issues associated with decentralized finance in Africa are presented. Recently, there has been an increase in the use of cryptocurrency, decentralized finance applications (dApps) and decentralized financial services (DeFi) in several countries. These innovations facilitate the delivery of financial services using smart contracts. Decentralized finance (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 decentralized finance (DeFi) is relatively new and unpopular in the African continent. There is low interest in decentralized finance in Africa. The benefit of DeFi to African countries include increased liquidity for small and medium scale enterprises (SMEs), new opportunities to raise additional capital to fund capital-intensive activities, it will usher in an era of smart contracts that are negotiated bilaterally without needing an intermediary, it will encourage peer-to-peer trade between economic agents in several African countries, it will enhance the efficiency of the Pan-African Payment Settlement System (PAPSS), and encourage more trade between individuals and corporations under the African Continental Free Trade Agreement (AfCFTA), amongst others