Bitcoin-oriented payments platform, Strike, has announced its plan to extend its services to Nigeria and several other African countries, including Gabon, Ivory Coast, Malawi, South Africa, Uganda, and Zambia, with more countries coming soon.
The decision to expand, according to Strike, comes from a response to the challenges of building and preserving wealth due to high inflation rates and currency devaluation. For instance, Nigeria is fraught with an economic crisis; inflation rates are nearing 30%, and its currency, the Naira, has depreciated by 230% over the past year. Likewise, Ghana has seen inflation surge to 23.5%, with an average of 14.3% over the ten years leading up to 2022.
Strike, which harnesses Bitcoin’s Lightning network for B2B cross-border payment transactions for its business clients, plans to provide economical cross-border payment solutions for individuals and businesses in these regions. Through these newly launched services, businesses and individuals in Africa can now open accounts, access business dashboards, and safely invest in Bitcoin and USDT.
However, Strike’s entry into Africa’s Bitcoin market is not without potential risks. Current market trends in places like Nigeria could pose challenges to its operations, in addition to competition from established platforms such as Coinbase and Binance offering similar Bitcoin services in Africa.
On February 21, the Nigerian government imposed access restrictions on several cryptocurrency platforms, including Binance, Coinbase, and Kraken, citing a need to stabilize its local currency. This action was taken despite the high adoption rate of cryptocurrencies among Nigerians seeking to protect themselves from the devaluation of the local currency. Additionally, the government recently arrested two Binance executives who had traveled to the country, following a ban on their web platform.
Moreover, the Kenyan government announced plans on February 20 to introduce new cryptocurrency trading laws, driven by concerns over money laundering and potential facilitation of terrorism financing. Historically, Africa has had some of the highest remittance rates worldwide, impeding the region’s financial development. The World Bank revealed in 2022 that the average cost of sending $200 to Africa was 8.5%, compared to a global average of less than 6%.
This high cost has made traditional remittance services both limited and expensive, with fees reaching up to 20% of the transfer amount for some African countries. These circumstances could make emerging markets like Africa more open to innovative, cost-effective solutions like Bitcoin, despite the possible regulatory challenges.
