A UNDP report on cryptocurrency in Africa suggests that crypto and stablecoins could improve financial inclusiveness to the unbanked and provide additional benefits.
The United Nations Development Programme (UNDP) has published a report on cryptocurrency in Africa in which the global agency explores the possibility of digital assets providing ‘alternative opportunities for advancing the sustainable development goals’ of the continent.
Crypto and Stablecoins Can Improve Financial Inclusion in Africa
The report highlights the financial impact of COVID-19 on the entire world, explaining that the pandemic hit vulnerable Africans hardest, resulting in ‘many years of development setbacks.’
It added that the pandemic, climate change and the ongoing war in Ukraine posed ‘huge challenges for developing and vulnerable countries in addressing loss and damage, building resilience, and moving towards green and fair transitions on their development paths.’
But cryptocurrencies and stablecoins could ease the impact of the three challenges by improving financial inclusion, particularly for the 60% of Sub-Saharan Africa (SSA) inhabitants with no financial institution accounts.
Crypto Can Facilitate Cross Border Trade and Provide Additional Benefits
The report also provided the following use cases and potential benefits of using crypto and stablecoins in Africa.
- The facilitation of cross-border trade
- Lowering transaction costs and increasing transfer speeds of remittances and aid funds
- Offering alternative revenue options for African countries through taxation of crypto
- Protecting individual, household and business savings from global inflation
- Enabling innovation models for financial biodiversity
Adoption of Crypto is Reliant on Policy and Regulation
However, the UNDP report quickly pointed out that for cryptocurrencies to offer benefits, proper policy and regulation must be implemented by respective African countries to safeguard users against widely known risks. These include market volatility, fraud, money laundering and terrorism financing.
UNCTAD Had, in August 2022, Called for Developing Nations to Stop the Rise of Digital Assets
To note is that the UNDP report issues a disclaimer that the views expressed within the document are those of its authors and do not necessarily represent that of the global agency, the United Nations or its member states.
However, it is hard not to identify that the report’s recommendations are in stark contrast to the August 2022 call by the UN Conference on Trade and Development (UNCTAD) for developing nations to stop the rise of cryptocurrency use within their respective jurisdictions.
‘If cryptocurrencies continue to grow as a means of payment, and even replace domestic currencies unofficially, the ‘monetary sovereignty’ of countries could be jeopardised,’ UNTCAD had warned.
Therefore, a loose conclusion can be made that the United Nations, as a whole, could, in the future, publish favourable recommendations for regulating cryptocurrencies amongst its member states.
~By John P. Njui~
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