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| Screenshot of Central Africa Republic Cryptocurrency framework |
The Central African Republic (CAR) has adopted a framework governing cryptocurrencies establishing bitcoin as official national currency, making it the first and only one in Africa, and second in the world just after El Salvador made a similar decision in sept 2021.
Lawmakers unanimously agreed to make bitcoin as national currency in a move expected to generate prosperity for the citizens, thus putting CAR "on the map of the most courageous and visionary countries in the world" according to a signed press release from the state minister Obed Namsio.
In an interview with Bloomberg, the CAR Finance Minister Herve Ndoba described the move as a positive move of embracing new technology:
“There’s a common narrative that Sub-Saharan African countries are often one step behind when it comes to adapting to new technology. This time, we can actually say that our country is one step ahead.”
Bitcoin makes remittances great again
For El Salvador,adopting bitcoin was to enable the diaspora save on commissions money transfers services charge as well as attract foreign investment in the country. Remittances in 2020 amounted to $6 billion representing 23% of the entire GDP of the Central American nation. And with adoption of bitcoin, the diaspora would save of up $400 million in transfer fees which would further boost the livelihoods of recipients.
CAR uses the French CFA franc as its currency where a population of 4.8million with 11% having access to the Internet. Considering that the country has suffered several conflicts, the skilled migrants abroad send money to support relatives back at home making remittances the largest source of foreign income in Sub-Saharan Africa (SSA) reaching up $47 billion in 2019. A large number of households depend on these funds to pay for food, education, health and shelter further lifting many out of poverty.
Unfortunately, SSA is charged the highest fees globally to send and receive money at 8.17 percent compared with the least fees at 4.9 percent for south Asia. This broad day robbery takes away the much needed relief for reciepients who are often unbanked and living in remote rural villages in Africa.
Considering that there are huge gains to save on remittances due to high fees charged by money transfer services, SSA economies would do well to embrace cryptocurrency legislation to increase the impact of remittances in their economies. Not only would this be a courageous and visionary decision, but one that will pull several Africans out of a poverty and contribute to the very much needed development of the continent.
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