Africa has become an important frontier for operators in the cryptocurrency market. Emmanuel Babalola, Business Director at Binance Nigeria, in this interview with BusinessDay’s Frank Eleanya shared on the exchange’s ambitions for the continent.
What has been responsible for the ATHs we have seen?
The new all-time high of the bitcoin price and cryptocurrency market cap can be associated with several things. However, one thing that has majorly affected the price is the increase in institutional adoption. What’s more, unlike past bull runs, access to the cryptocurrency market has increased significantly. For instance, there are more direct fiat gateways now. Binance allows several users in Africa to purchase crypto with their local currencies directly.
Usually, after such bull runs, the market goes into a correction, is that what is happening with the price retreat?
Markets by their very nature ebb and flow continuously – and it is better to focus on the underlying factors that can be said to affect the price. If we look under the hood of the blockchain and crypto industry – everything from on-chain metrics to regulatory clarity has been improving globally. As a company, we prefer not to fixate on price but providing the best platform and products for our customers – so they can make the most of these market movements.
What role has the economic headwinds and currency devaluation in Nigeria and other African countries played in the movement in the market?
On the continent, several cryptocurrency investors have mentioned using bitcoin and other cryptocurrencies as a safe haven. Unlike traditional currencies that lose their value over time, cryptocurrencies are a much better way of reserving value. With the poor performance of several African currencies over the past few months coupled with a bad economic outlook, more people continue to save value in crypto. In addition to this, some African countries often impose quite strict capital controls on individuals – making it difficult for them to engage in international trade and commerce transactions, and cryptocurrencies (like bitcoin) by their nature help solve this.
How about adoption in Nigeria, how significant has it grown?
In 2021 we will see more adoption and usage of cryptocurrencies on the continent as we continue to see the immense interest. A major shift we expect to see is the increase in high-level participation by Africans. We expect to see more developers, content producers, creators, and builders from the continent. This will lead to more African led projects and the localization of cryptocurrency products and services to fit the diverse needs of African users. As part of efforts to make this a reality, Binance continues to lead in cryptocurrency education, with a plan to train well over 1,000 developers in the first quarter of 2021.
What category of investors is dominant in Nigeria? Is it, individual investors, group investors, or institutional investors?
Within the Nigerian market, we really see our customer base quite spread between these segments. Retail usage is at an all-time high, while in the same breath a number of corporate and institutional clients have utilised and integrated our services and products customising them for Nigerians.
What are the use cases for cryptocurrencies in Nigeria?
Nigeria has experienced domestic currency devaluations, coupled with very strict capital controls. This means that while most first-world countries may adopt cryptocurrencies at this stage out of novelty or for investment purposes – Nigerians are by and large using them as the name suggests – as currencies, stores of value, etc.
What is Binance’s position on the regulation of cryptocurrencies in Africa?
Binance is very supportive of the efforts to regulate the sector, in the effort of ensuring users are afforded the most protection they can get when operating in the sector. We take our users’ security, and our compliance responsibilities very seriously.
What can Africa do to deepen its role in the global cryptocurrency market in terms of infrastructure?
Africa is already a key player in the global crypto market; with Nigeria leading the charge even as seen on Google trends, in terms of infrastructure, Africa illustrates one of the fundamental use cases for crypto. We have a lot of potentials and Binance Africa is committed to raising and investing in tech talents on the continent, as this will be critical to what comes next as the industry continues to evolve.
Are the trends you see taking place in the cryptocurrency market in Africa in 2021
2020 will be quite a tough act to follow for the crypto asset market as a whole, but the only thing that outpaced the price of bitcoin last year was the growth of our African user base. The main barrier to entry in these markets has begun to be overcome over the past few years – access and infrastructure. We now feel the next barrier to mass adoption is education – which is why in 2020 we invested so heavily in educating people from all walks of life across Africa on the power and use cases of crypto and blockchain. In 2021 this is something we will see accelerate – particularly with growing interest from the retail market. As Binance we will continue to play our role as the trendsetter in Africa – and in so doing bring crypto to everyone. As our CEO, CZ said – our goal in Africa is to “Bitcoin the unbitcoined”.
