BeinCrypto spoke to Marius Reitz, the General Manager of Luno Africa. We discussed the growth of crypto in Africa, the hurdles, and what’s in store for crypto across the continent.
Luno, began as BitX in 2013 in South Africa before a rebranding in 2017. From the beginning, it expanded its African markets, including Nigeria, in 2014.
Following impressive growth, the company set up the Luno African regional offices in Johannesburg. From here, the company works with markets across the continent.
“We’ve launched operations in Uganda and also opened a remote office in Nairobi, while growing our office in Lagos, Nigeria,” explains Reitz.
“Luno sees Africa as one of, if not the most promising region for the adoption of cryptocurrencies due to its unique combination of economic and demographic trends.”
Success in South Africa and Nigeria
In its two biggest markets, Luno has seen impressive growth and adoption. The platform saw almost a million new customers in South Africa alone during 2020. In addition, Nigeria took the spot as second-biggest bitcoin trader in the world in the same year.
“We were the first company to enable SA and Nigerians to buy crypto with their local currency, which made access safe and easy.”
However, despite positive growth, Nigeria is one example of a market meeting complicated roadblocks. In February, the Central Bank of Nigeria (CBN) ordered all financial institutions to stop providing on and off-ramp crypto services.
For Luno, this meant customers have been unable to withdraw or deposit their money. In May, Luno CEO Marcus Swanepoel assured users that the exchange was still negotiating with stakeholders to find a solution.
Addressing regulatory authorities
Despite the issue in Nigeria, according to Reitz, Luno “works closely with regulators in the territories in which we operate.”
“Regulatory authorities internationally are paying attention to the rules that should govern the cryptocurrency industry but it would be fair to say that many governments in Africa are cautious and even hostile to cryptocurrencies.”
Reitz explains that Luno supports regulations for cryptocurrencies. It has an interest in working with regulators in the territories it operates in. In fact, that’s where much of its efforts are placed.
“Most of our efforts have been on the regulatory front, speaking with regulators in countries such as Uganda, Zambia, Kenya and Ghana to share learnings and our experiences from working with regulators in other countries where Luno operates.”
“Several are quite progressive in working with industry to build regulations that make sense and are enforceable. In South Africa, for instance, we work closely with the Intergovernmental Crypto Assets Regulatory Working Group, which also includes the Financial Sector Conduct Authority,” he explains.
He explains that while regulations, in some context, may bring more restrictions, this doesn’t mean it’s going to be the long-term outcome.
“We’ve seen a clear global move to regulate cryptocurrency or the companies that provide cryptocurrency related services,” he explains.
“In the short term, we could see more restrictions, e.g. bans on banks that provide deposit and withdrawal services to crypto companies. This will make access more difficult in the short term, but more often than not the end result will be the introduction of new regulations, as was the case in Malaysia.”
However, Reitz explains that despite the length of the progression, regulations are important ultimately for consumers.
“In the absence of regulations, it becomes more difficult for consumers to get easy access to crypto with their local currency as banks are reluctant to work with crypto platforms,” he says.
“In Africa the utility of cryptocurrencies is attractive.”
Beyond regulatory issues, Reitz sees Africa as fertile ground for cryptocurrencies.
“Luno sees Africa as one of, if not the most promising region for the adoption of cryptocurrencies due to its unique combination of economic and demographic trends.”
He specifically references the remittances, which are a key source of income for families across Africa.
A remittence is money paid by a person in a foreign country to their family back in their home country. This is incredibly common in sub-saharan Africa, as those from struggling economies will go find employment elsewhere.
“Remittances are an important source of income to many families and a source of foreign currency to many countries,” explains Reitz.
“In 2019, expats sent around $48 billion back to families in sub-Saharan Africa according to the World Bank.”
However, traditional money transfers are often inefficient and carry high fees. This is one space where cryptocurrency exchanges are proving to be powerful tools.
Reitz also sees stablecoins and DeFi as solutions to other problems, including the un- and underbanked.
However, overall Africa has a positive outlook. Growth of tools that will help increase adoption is promising. For example, smartphone and internet penetration are improving, making accessing exchanges easier than ever.
In 2017, there were 250 million smartphone connections across sub-saharan Africa, accounting for 34% of
total phone connections.
According to a report written in collaboration with Luno, The State of Crypto-Africa, this is projected to increase to 690 million in 2025, with smartphones accounting for 67% of phone connections.
“Taking into account demographic and societal trends, with a fast-growing, young and mobile-native population, Africa is well-suited to the rapid adoption of cryptocurrencies.”
Adoption through education
Reitz sees education as important to Luno’s efforts and adoption of cryptocurrencies across markets. It has been this area that Luno has been focusing on.
“Luno has a massive focus on education – we were the first and only company to provide educational content to customers via the free learning portal,” explains Reitz.
“In our view, one of the mistakes the crypto industry made was to overestimate the level of crypto knowledge of the general public. We still have a long way to go until most people start to use crypto in their everyday lives.”
This, in combination with real-life utility, is what he notes as the basis for growth of cryptocurrencies.
“If crypto solves a specific problem, e.g. enabling a migrant worker to send money back home without incurring exorbitant fees, then people will use it. Grassroots level growth is the basis of the growth of cryptocurrency – any disruptive technology, in fact,” he says.
“Innovative technologies take hold because they disrupt the status quo by making it easier and quicker for people to get things done.”
Disclaimer
In compliance with the Trust Project guidelines, this opinion article presents the author’s perspective and may not necessarily reflect the views of BeInCrypto. BeInCrypto remains committed to transparent reporting and upholding the highest standards of journalism. Readers are advised to verify information independently and consult with a professional before making decisions based on this content. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
