Central African Republic wants to build the continent’s first cryptocurrency investment hub

Central African Republic (CAR) is set to launch a cryptocurrency investment hub, extending the country’s embrace of digital finance. The project, which the country tagged “Project Sango” is Africa’s first-ever crypto initiative, and “will,” according to a white paper published by the CAR government, “enable people to transact using Bitcoin and other cryptocurrencies tax-free.”

“Project Sango” is a movement by the National Assembly supported by the government of the Central African Republic. It will help to attract crypto professionals and enthusiasts to work and live in the country. The initiative seeks to “pave the way to a digital future of endless possibilities”. As part of plans to implement the initiative, the nation will establish a Digital National Bank.

The crypto project will also allow users to manage NFTs in the metaverse in order to unlock additional functionalities like marketplace ownership, funding and tokenization of assets.

As a way to ensure that this project succeeds, the CAR has stated that it will allow land acquisition in Bitcoin for investors from across the world as well as provide access to its natural resources. The whitepaper did not explain when or how the investment hub would launch. Nonetheless, it outlined the country’s intent to complete the Central African Backbone (CAB) internet connectivity and become the first African government to establish a legal framework for cryptocurrencies by the end of 2022.

The proposed legal framework will focus on e-residency, citizenship by investment, online business registration, zero income and corporate tax, digital identity and ownership, crowdfunding, tokenization, and a Digital National Bank.

Implications of “Project Sango”

Several researchers and the International Monetary Fund, IMF, expressed concerns and objections over CAR’s use of Bitcoin as legal tender. According to Bloomberg, the IMF has stated that the use of Bitcoin as legal tender in the Central African Republic creates a number of challenges for the country and the region. “The adoption of Bitcoin as legal tender in CAR raises major legal, transparency, and economic policy challenges. IMF staff are assisting the regional and Central African Republic’s authorities in addressing the concerns posed by the new law.” the Fund stated.

This country is falling behind in the development of broadband Internet connections in the Central African Republic. Approximately 10% of CRA’s population has access to the Internet. According to DataReporting, the country’s internet penetration is “stubbornly low.”

The Central African Republic’s internet user base grew by 61 thousand (+20.8 percent) between 2021 and 2022, according to Kepios. To give you an idea of how big this number is, 4.61 million people in the Central African Republic did not use the internet at the beginning of 2022. This means that 92.9 percent of the population did not have access to the internet at the start of the year.

Conclusion

CAR is among central African countries including Cameroon, Chad, Equatorial Guinea, Gabon and the Republic of Congo that use one of two versions of the CFA franc. The region’s monetary rules require consultation on changes in currency policies.

The crypto project could “reshape CAR’s financial system,” according to President Touadera’s Tweet on Tuesday. With an economy worth about $2.3 billion, CAR is seeking ways to develop its resources. The government expects its plan to help crowd-fund infrastructure projects. It will also create a digital national bank, according to the presentation. 

“We have concerns regarding transparency as well as the potential implications for financial inclusion, the financial sector and public finance at large, in addition to environmental shortcomings,” the World Bank said.