Blockchain funding soared by a stunning 1,668 per cent in 2022 compared to the preceding year, accumulating a total of $91 million (Sh 12.6 billion) in Kenya, South Africa and Nigeria.
This is according to the recent "State of Web3.0 in Africa" report launched by EMURGO Africa in partnership with PwC.
According to the report, even though Africa has thus far received 0.5 per cent of global blockchain funding, the continent's commitment to Web3.0 technologies and digital currencies is poised to recalibrate.
This is in terms of its technological and financial landscape, paving the way for unprecedented financial inclusion and innovation.
The weakening Kenyan shilling coupled with a fragile economy has created a rapidly growing demand for USD-pegged stablecoins.
This is aimed at protecting valuables from a free-falling shilling that risks devaluing some of these assets as owners of SMEs seek cheaper and efficient ways of payment.
The Kenyan currency has been on a downward trend trading at Sh140.6 against the dollar as of Thursday.
“This development is a testament to the burgeoning adoption of digital currencies and blockchain technology as practical solutions in economically volatile environments,” the report read.
It also revealed that Kenya plays a forefront role when it comes to blockchain adoption and digital innovation.
“Kenya has showcased speedy growth in implementing blockchain solutions that stimulate economic development in East Africa,” it said.
In South Africa, the report indicates that the escalating adoption of Web3.0 and blockchain technologies are revolutionizing industries via secure and transparent data management in Southern Africa.
It also highlighted Nigeria's high-ranking position in the top 10 worldwide for crypto adoption, emphasizing the country's role in propelling financial inclusion and nurturing innovation in the digital currency sector in West Africa.
Kenya has a high cryptocurrency adoption rate and is placed fifth globally in terms of crypto ownership as a share of the total population in 2021 (8.5 per cent; 4.25 million people) according to a report by the United Nations Conference on Trade and Development.
UNCTAD attributes Kenya's growing use of digital currencies to low fees charged by crypto exchanges, the speed with which remittances are sent, and increasing internet access.
EMURGO Africa CEO Ahmed Amer said Web3.0 technologies are already redefining the African digital landscape, offering innovative solutions to long-lasting challenges.
He also said that Web 3.0 technologies are empowering individuals and communities across the continent.
“This report presents an in-depth exploration of the potential of these technologies to drive positive change while highlighting the importance of fostering a collaborative environment between stakeholders, policymakers, and regulators to unlock the full potential of Web3.0," he said.
The Middle East and North Africa region, concurrently, has been identified as the fastest-growing crypto market from 2021 to 2022, leading the digital revolution among users, regulators and crypto investors alike.
On the global stage, crypto regulation is evolving, with 40 per cent of the 35 nations surveyed having instituted regulatory frameworks, 34 per cent actively developing them, and a scant 9 per cent enforcing outright prohibitions on cryptocurrencies.
Currently, there are no specific laws or regulations governing the use of blockchain technology in Kenya.
According to the report, in terms of cryptocurrencies, former CBK governor Patrick Njoroge revealed in September 2022 that the country would explore introducing a regulatory framework for cryptocurrencies.
This was followed by the proposed amendment of the Capital Markets Bill in November 2022.
It seeks to require those with or dealing with cryptocurrencies to provide information to the country’s CMA about their activities for tax purposes.
The compilation of the "State of Web3.0 in Africa" report marks a significant milestone, charting the course for understanding the opportunities, challenges and potential of blockchain and Web3.0 in Africa and the MENA region.
The report also underscores the importance of a balanced regulatory approach in safeguarding individual privacy and protection.
This is with 20 per cent of Sub-Saharan African countries currently outlawing crypto-assets, and establishing data protection laws in countries like Kenya, Nigeria, Egypt, and South Africa.
The report also accentuates the imminent impact of the metaverse on businesses.
Based on PwC’s Metaverse Survey, an overwhelming 82 per cent of executives anticipate metaverse integration within their business operations in the next three years.