It is no longer a secret that the continent with the highest potential for cryptocurrency firms and services is Africa. It is remarkable how many new tech start-up centres have recently emerged in African cities, from Lagos in the west and Nairobi in the east to Agadir in the north.
Fintech startups can carve out a niche on the continent, where the problem of unbanked people is an urgent one. Humaniq is one such promising project that it is worth paying attention to. The London-based FinTech firm released an application for unbanked last year, which is now available in five African countries, including Tanzania.
The Humaniq app can be used on low-end mobile devices and, thanks to peer-to-peer transactions and referral programme, it is connecting people who do not have access to traditional banking services while not supplanting the latter. A hundred thousand downloads of the Humaniq App in Android is an excellent illustration of Africa’s enthusiastic uptake of technology. In 2018, the company has plans to build on this and achieve one million users.
There is a reason why Tanzania is under Humaniq’s spotlight. At this point in time, the East African nation has a number of challenges that need to be overcome in order to achieve full and meaningful financial inclusion necessary for everybody to participate in the 21st Century economy. This is why Tanzania represents a good target for blockchain startups.
Make hay while the sun shines
According to the National Financial Inclusion Framework (NFIF), Tanzania’s economy is gaining more and more momentum. It is making remarkable progress in expanding opportunities for people to access and use financial services to reach the goal of economic inclusion. Humaniq proposes a shift of emphasis to achieve this: from access to usage. It is only when people and businesses derive value from financial services that they will use them regularly as a matter of choice. A responsive, deeper and sustainable financial sector is one that offers a choice for individuals, households and enterprises and can make a meaningful contribution to economic growth, Humaniq’s team believes.
The uptake of traditional financial services for transactions reached 65 percent in 2017 compared to less than 58 percent four years prior. Accessibility, measured by the proportion of the population living within five kilometres from locations where financial services are provided, has grown from 45 percent to 86 percent nationally and is already at an impressive 78 percent on average for those living in rural areas.
The growth in active mobile wallets has reached over 21 million (75 percent of the Tanzania’s adult population) while those actively using mobile financial services now stands at 16.6 million as reported by FinScope Tanzania 2017. Some of the inhabitants even have more than two mobiles per family, and 14 percent of those who have ever used a phone run their own business from the device.
Despite all these achievements, the level of financial exclusion is still high at 28 percent of the population. And this figure includes disproportionate numbers of people who live in rural areas, smallholder farmers, young people and women. It has also been observed that there is a big gap between the demand and supply of financial services in the market, whereby the majority of products do not meet users’ needs. However, such figures mean for Humaniq a promising user base and a ‘blue ocean’ for thousands of new projects to thrive, bringing ideas that can overcome the economic problems that Tanzanians face.
So what are the problems that continue to act as a brake on the progress of the nation’s citizens that make it impossible for every Tanzanian to enjoy the goods and services that are available to many others in the world?
Humaniq knows where to start
First and foremost Tanzanians do not have consistent sources of income. Typical microfinance clients have low incomes ($1.25 a day) and are often self-employed in the informal economy. These conditions together tend to deny them access to banks and other formal financial institutions. They commonly run small stores or street stalls, create and sell items they make in their homes. In rural areas, they are often microfinance clients who may be small-scale farmers and people who process or trade crops and goods.
Humaniq, for its part, enables a peer-to-peer economy. It allows banking services to be offered everywhere, including to people in areas that are not served by traditional banks, and so are able to enjoy the 21st Century economy’s opportunities. It also opens up the possibility to address the problem of unemployment, as people could directly find each other, and send money to, and receive it from, other people. This way of providing financial services is not only more democratic and accessible, it also offers better security, because there is no central server for hackers to attack, and the information on transactions cannot be tampered with.
Secondly, what cannot be ignored is the fact that a low level of general literacy and numeracy leads to a low level of financial literacy among the general population and business owners, including a lack of knowledge about financial services, institutions and the Internet.
Humaniq’s team has prepared for such a challenging scenario: through the Humaniq app Tanzanians will have the opportunity to take a course in financial literacy and to take part in a number of simulation games, after which they will be rewarded in HMQ, the Humaniq token. Every new user receives $20 worth of HMQ in their account related to these interactions with the app, the value of which bears no relation to their local currency.
Thirdly, in Tanzania, it is very difficult to obtain credit from financial institutions. One cannot avoid high-interest rates, collateral and travelling long distances to and from banks – as much as 20 to 30 km in one day. The process of taking a large loan is complicated by the fact the numerous difficulties in the registration of land ownership, frustrating the receiving of large loans from banks. Only 3 percent of citizens own land. According to VICOBA’s data, the registration of land costs as much as $100 – $ 250. Such sums of money are too high for local farmers. As a result, 44 percent of Tanzanians (12 million adults) took a loan in 2017 but the vast majority, 69 percent of them (8 million), borrowed from friends and relatives, not from traditional banks.
Humaniq facilitates and formalises the process of taking out a peer-to-peer loan. Now, thanks to the power of these people-powered transactions, one can lend and borrow more easily and quickly than before, and without relying on the financial industry and its fee-charging field representatives. And in addition, users gain HMQ cryptocurrency simply for recommending friends and making transactions.
Humaniq’s ambassadors in Tanzania pursue social, humanitarian and commercial objectives, giving isolated people the chance to improve their lives for the better and to improve their prospects in the country.
Nigeria’s Capital Markets Regulator to Create Framework for Cryptocurrency Regulation
Nigeria’s blockchain community and cryptocurrency exchanges could get a clear stance on the classification of cryptocurrencies from the country’s Securities and Exchange Commission (SEC) before the end of the year.
A Framework for Cryptocurrency Regulation Is Coming
According to a report by Pulse, the regulatory institution is set to implement the roadmap for the fintech industry as it pertains to its capital markets. According to the roadmap, between the last quarter of this year and the first quarter of 2020, the SEC is expected to:
- Decide on its preferred classification of cryptocurrencies (either as commodities, securities or currency).
- Develop a framework for the regulation of Virtual Financial Assets (VFAs) and VFA Exchanges.
- Issue guidelines and standards for whitepapers and ICOs.
- Develop a framework for KYC and due diligence for cryptocurrencies, Virtual Financial Assets, tokens, and ICOs.
- Define clear classification for tokens based on their unique properties. They could be payment tokens, asset tokens, utility tokens or others.
The Acting Director-General of the SEC, Mary Uduk, revealed at a Capital Markets Committee briefing last month that the Working Group to drive the implementation of the roadmap would be chaired by Adeolu Bajomo, the Vice-President of the Fintech Association of Nigeria.
Cryptocurrencies as Commodities or Securities But Not as Currency
One of the recommendations that stands out in the roadmap, which was prepared by a committee comprised of officials from the regulatory agencies, the private sector, and a member of the blockchain community, is for the SEC to recognise cryptocurrencies as commodities or securities, and not as a currency. This classification is expected to have tax implications for investors.
This recommendation is in line with the central bank’s directive last year, which stated that “virtual currencies” were not a legal tender.
Cryptocurrencies have lacked a single, definite identity. For example, Germany is treating them as money and means of payment while the US uses the Howey test to decide whether a cryptocurrency is a security or not.
Crypto Adoption in Nigeria
Citigroup, a US investment firm, reported in January 2018 that Nigerians were the third-largest holders of bitcoin as a percentage of gross domestic product (GDP). The use has ranged from trading to making fast, low-cost cross-border transactions, saving on the high fees taken by commercial banks and traditional money-transfer services.
Nigeria has a fast-growing young population with a significant chunk below the age of 35. But there is still a small number of people with access to the financial system. Less than 50 million people with bank accounts in a population of over 180 million. Blockchain applications could be a great way to onboard millions of underserved people into the financial system.
With the SEC expected to take responsibility for the regulation of cryptocurrencies in the country soon, we can foresee more scrutiny of Nigeria’s biggest crypto companies, which could lead to a more secure crypto trading ecosystem down the road.
Black-Owned Blockchain VC Firm SADA Launches in South Africa
Blockchain VC firm South African Digital Assets Partnership (SADA) launched in South Africa. The venture capital company is black-owned and based in Sandton.
Supporting Blockchain Projects
South African Digital Assets Partnership aims to promote the adoption of blockchain technology and cryptocurrencies by supporting projects that solve African challenges. SADA concentrates on tokens, funds, businesses, and projects related to the blockchain and digital assets.
“SADA is incorporated to further build and invest in blockchain projects that seek to address Africa’s needs for a far more efficient and transparent financial system while presenting an amazing opportunity for the people of our country and continent to be part of what we call the “6th Digital Revolution. We call it the “6th Digital Revolution” because we believe what cryptocurrencies and particularly bitcoin have done is position the world to transact and invest in a new digital world,” Zamo Tshabalala, the CEO of SADA, said in a press release.
SADA’s board is comprised of blockchain entrepreneurs such as founder and CEO of Cryptovecs John Lombela, co-founder of GA Capital Mendy Nkosi, and founder of Blueline Accounting Group Hein Schmidt.
Presently, SADA is running and managing five funds that strategically serve the diverse needs of investors not only in South Africa but on the entire continent.
“SADA focuses 100 percent on the rapidly evolving digital asset sector, maximising our investors’ capital growth through a proprietary and actively managed investment strategy while placing a key focus on amazing projects and teams changing and improving the African economy through blockchain,” Tshabalala asserted.
Africhain Fund is the entry-level flagship crypto 30 index fund for retail investors. The A-Team Capital Fund is the high entry-level flagship fund for financial advisors, high net worth individuals, investment companies, and fund managers.
SADA has invested in the Digital Rand through its Blockchain Fund. The Digital Rand is the first digital asset to be pegged 1:1 to the South African Rand.
Furthermore, SADA is guided by the relevant regulations in South Africa. According to an official statement, the company explained: “SADA has proactively aligned itself with regulation by being administered by an FSP registered entity, Olwevu Group, and is a member of many blockchain associations including South African Financial Blockchain Consortium (SAFBC) which boasts members such as MMI Holdings, Standard Bank, and other big financial players in South Africa. We understand the importance of regulation with the prevalence of scams that have swept through South Africa in the last four years.”
First ETHGlobal Hackathon in Africa is Coming to Cape Town
The first ETHGlobal Hackathon in Africa will be held on April 19 to 21, 2019 at The Lookout, V&A Waterfront in Cape Town, South Africa.
Organised by ETHGlobal and Linum Labs, the event dubbed ETHCapeTown will see more than 200 international developers, hackers, and blockchain enthusiasts gather to work together to create Ethereum-based decentralised applications (DApps).
ETHGlobal aims to build an ecosystem of Ethereum developers and entrepreneurs with support from the Ethereum Foundation. Linum Labs is a Swiss blockchain development company with an office in South Africa.
Kartik Talwar of ETHGlobal said: “Ethereum development is growing fast, and it is valuable for the developer community in Cape Town to get together, discuss ideas, and push the envelope on what they themselves can do. And this is one of the goals of the hackathon – to simply give developers a place and time to build what they want and to see where their ideas take them.”
ETHCapeTown will bring together people from different backgrounds with a wide range of skillsets where they can share ideas and develop original blockchain-based solutions.
“One of the most notable things we have noticed in the space is the incredible capacity at which developers utilize new tools during time-sensitive environments at hackathons to deliver decentralised solutions that can have real-world impact,” said Devon Krantz of Linum Labs.
Cape Town: Africa’s Growing Tech Hub
According to Linum Labs, the ETHGlobal Hackathon will highlight that Cape Town is setting the path for innovation on the continent.
“The ETHCapeTown hackathon is again proving how Cape Town is pioneering the way forward for innovation in Africa. The city’s local tech hub is alive, thriving, and hungry to grow and position itself as a leading destination for emerging technologies,” Krantz stated.
The ETHGlobal Hackathon will be graced by Ethereum co-founder, Vitalik Buterin, who will be the first official judge of the ETHCapeTown 2019 Hackathon.
Hackathon attendees will be exposed to some of the leading minds in the global blockchain industry and have the opportunity to win prizes for the solutions they build. Registration for the ETHGlobal Hackathon is open now.
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