Due to poverty and stringent economic conditions, hundreds of able Africans seek better employment opportunities in Europe and Asia. However, the high taxes and unfavourable monetary policies of many African countries make home remittance expensive. Migrant workers from the African continent are turning to cryptocurrency to affordably send money home.
Conventional financial transfer platforms always take longer to remit money from one country to another. Using these methods, the sender pays large fees to transfer a given sum of money from one country to another. Cryptocurrency offers a more robust and cheaper option for financial remittance across borders.
This existing phenomena has forced African migrants working in Europe to rethink their financial remittance options to crypto. Usage of traditional remittance platforms have greatly been affected by the raging coronavirus pandemic. Movements and especially access to financial institutions such as banks became very limited.
A recent survey by Foreign Policy news outlet indicates that huge amounts of money have gone via cryptocurrency remittance since the onset of the coronavirus in march last year. The surge in the use of cryptocurrency can not only be attributed to the pandemic but also the increased fees charged by money transfer companies across the world.
Globally more than 270 million people live and work in another country other than their home countries. This figure represents about 4 percent of the world population. These migrant workers heavily rely on financial institutions to send money back home to their families who may depend on the remittance for survival.
This existing condition makes cross border money transfer an important aspect of the global economy. Besides many developing countries derive directly or indirectly a good percentage of their GDP from money remitted from abroad. Thus, cryptocurrency could become a vital solution to financial remittance hiccups.
Many African governments are still ill prepared to host cryptocurrency officially within their borders. Recently, CoinIdol, a world blockchain news outlet, reported how the Nigerian Central Bank moved to ban cryptocurrency in the country forcing all commercial banks from dealing with crypto related accounts. It took the counsel of the country’s VP for the central bank to take another route calling off its ban on cryptocurrencies in the country.
Financial data indicates that money remittance via traditional channels into Nigeria dropped by more than 97% between January 2020 to September of the same year. Meanwhile in many other African countries cryptocurrency usage by the General public remains illegal or closed monitored by the central bank.
Nevertheless, the interest in this nascent technology is obviously growing. As the number of cryptocurrency users is constantly growing, governments might eventually have no choice other than embrace or at least explore this innovation.