Since April 26, 2022, Bitcoin has become official currency in the Central African Republic. Following the announcement, Central African President Faustin-Archange Touadera said in a tweet: “Mathematics is the language of the universe. Bitcoin is the global currency.”. Full program analyzed for franceinfo Afrique by Jean-Michel Hoyt, Partner at BearingPoint and author of the book Africa and digital (Pearson).
– Faustin-Archange Touadera (@FA_Touadera) April 27 2022
Franceinfo Africa: What is the challenge and interest for the Central African Republic to legalize Bitcoin, the first of its kind on the African continent?
Jean-Michel Hoyt: Even if there are very few countries that have done so, the use of bitcoin makes it possible to diversify the means of payment. The benefit of its development is to consumers and businesses that, until now, only use cash. As an electronic currency, bitcoin can be an element that contributes to financial inclusion, especially for women. Thus, people have means of payment that does not require them to travel and carry money, thus circumventing the risks associated with such business. This approach is very complementary to mobile payment. The peculiarity of the Central African Republic that made Bitcoin official – I think only El Salvador is part of the same approach – is to make a risky bet. Bitcoin has the advantage of being able to be used all over the world, but it has one major drawback, which is the value that fluctuates greatly. Over the past 12 months, bitcoin has collapsed quite a bit.
However, when we talk about electronic money, whether it is mobile payment or central bank electronic money, it is still something that allows citizens and businesses to have different means of payment. In countries where there are not many banks, as in the Central African Republic, people do not have many options except for cash. As such, offering them a new payment method is a very good thing in absolute terms.
Isn’t it dangerous to use a cryptocurrency when your political situation is a source of economic instability and therefore monetary instability, when you are already benefiting from a more stable currency, the CFA franc pegged to the euro?
I think it is a political decision that amounts to saying: “We no longer rely solely on the CFA franc.” However, it also has a technical and practical dimension because it is a cash option that can be implemented quickly. But this raises, once again, the issue of monetary risk due to the volatility of Bitcoin which remains highly speculative while the CFA Franc is stable. However, it should be noted that bitcoin is not a currency that can be held only if you are willing to speculate, but I do not think that this is the priority for the citizens of Central Africa.
Another option the Central African Republic could have made was Nigeria. Namely, the preparation of electronic money in the form of a blockchain, and why it is not backed by the CFA franc. But it takes longer and is expensive, unlike bitcoin which is easily run.
What is the point of adopting a cryptocurrency when the internet doesn’t always work well?
No broadband, 5G or 4G needed. We do not share the video, it is very simple data. Basic communication coverage, 2G is sufficient.
Is the average Central African able to use Bitcoin?
Technically yes. All you need is a phone and a virtual bitcoin account. However, money indicates a prominent social dimension. Change of currency and means of payment does not happen overnight. Mobile payment has been a huge success in Africa, but it’s been fifteen years since it was introduced. In France, we had some setbacks in the eighteenth and nineteenth centuries with certain means of payment, including banknotes, which were not immediately accepted. In the Central African Republic, there may be a political decision, but that does not mean that consumers will adopt bitcoin immediately. You have to already understand how it works and have confidence. Today, I don’t know if Central Africans will immediately trust this electronic money that is Bitcoin. I believe that this measure should be doubled with support for the development of mobile payment at CFA which today is simpler and less risky for the citizen to have a means of electronic payment.
Where are African countries in general when it comes to cryptocurrency?
The majority strategy that we find today is to obtain electronic currencies from central banks, recognized and guaranteed by states. They are deployed by central banks that use the same technology as cryptocurrencies. But these currencies are not cryptocurrencies because they are guaranteed by the state. It is not a private coin. It is more reassuring for people, but its implementation does not happen overnight, unlike bitcoin, which only needs to be recognized as a means of payment in order to be operational. There is a third, complementary way: simply to encourage the development of mobile payments.
Why are cryptocurrencies of general interest to African countries?
The order can be set up overnight! Moreover, if you have financial partners who are somewhat excluded from the global exchange sphere and their currency is no longer widely recognized, then this is another way to exchange with them.