The State of Web3 in Ghana

The State of Web3 in Ghana

Ghana is one of the bright spots in Africa’s cryptocurrency story. The West African country has often been touted as a state with immense potential and one of the candidates for major cryptocurrency adoption on the continent. In this article, the Africa Money & DeFi Summit looks at the state of the cryptocurrency industry in Ghana, the host country for the 2023 edition of the conference. 

Ghana, also referred to as the gateway to Africa, seems to have all the conditions necessary to become the gateway to Africa in the cryptocurrency space, too. The West African state has a more stable political environment with successful elections and hand-over of power since 1992, good mobile penetration, and connection of areas to the electric grid alongside an economy that is already used to mobile-based financial applications due to the popularity of mobile money. In 2022, data from the Bank of Ghana indicates up to ¢1.07 trillion Ghana cedis was sent through mobile money despite an electronic levey (E-levy) policy that introduced a tax for all electronic transactions. 

One may consider all the factors mentioned so far as a good launchpad for cryptocurrency adoption. However, the current state of the Ghanaian economy makes a stronger case for why Ghanaians will be excited about cryptocurrencies. The country has witnessed a tumultuous economic situation since the COVID-19 pandemic that has led to high inflation, a higher cost of living, and a return to the International Monetary Fund for support. These issues tick the boxes for the usual reason why people in developing markets adopt cryptocurrencies. People in Ghana may want to turn to cryptocurrencies like Bitcoin and Ethereum and stablecoins like USD Coin (USDC) and Tether USD (USDT) to store value and escape the decline of the Ghana cedi and lack of attractive returns from saving at local banks. Beyond this, the average Ghanaian may turn to the Web3 industry as an industry worth pursuing due to the country’s high unemployment levels. As of 2021, unemployment in Ghana had tripled in 10 years. These economic factors, in addition to decent infrastructure, make Ghana a prime candidate for a crypto takeover. 

Has crypto taken over Ghana yet? 

The answer to this question is no for now. Ghana has a decent level of cryptocurrency adoption compared to most other African countries but falls behind the Nigerian, South African, and Kenyan markets. 

According to data from Singaporean cryptocurrency provider and aggregator Triple A indicates that only 2.16% of the population owns cryptocurrencies. This represents a little over 700,000 people who own cryptocurrencies. 

The Chainalysis Global Crypto Adoption Index published in September 2023 ranks Ghana as the 29th state when comparing the level of cryptocurrency adoption among countries across the world. 

In a recent crypto interest in Africa, a report published by CoinGecko ranked Ghana as the 4th highest country in Africa behind Nigeria, South Africa, and Morroco. All these reports show a clear pattern of a rising interest in crypto in the country and that the West African state is indeed one of the bright spots for crypto on the continent. 

Over the years, companies like Binance, Paxful, YellowCard, and LocalBitcoins (before its demise) have been the popular cryptocurrency platforms in the country. Binance has become the leader in peer-to-peer trading, the main method through which Ghanaians exchange the cedi for crypto and vice versa. Users can choose from multiple payment options such as mobile money (Vodafone cash, MTN Mobile Money, AirtelTigo Cash) and bank transfers. Prior to Binance’s dominance in the P2P market, Paxful was ahead of its competitors. The Bitcoin-centric platform is also another popular option for P2P traders. Unlike Binance, which is largely built around mobile money and bank transfer, Paxful has several payment options, including PayPal and gift cards, which appeal to some traders. YellowCard has also become a go-to option for users looking to buy or sell cryptocurrencies. 

A key component of the strategies of these popular exchanges in Ghana is the focus on educational programs usually targeted at younger people in universities. “Campus-tours” and “crypto campus events” are a popular sight in the country and have contributed to the cryptocurrency culture among young people. Besides exchanges, several communities and projects also contribute to educating the masses about cryptocurrencies—communities like EthAccra, Aya, Afroblocks, BlockXAfrica, Blockchain Builders Association Ghana, and Bankless Africa are also at the forefront of the crypto education movement in Ghana. 

The country is also home to some budding African Web3 startups like Mazzuma. The Ghanaian-based AI and blockchain startup recently raised capital and announced its new flagship product, MazzumaGPT, a platform that allows developers to generate smart contracts quickly. Data from the African Blockchain Report 2022 shows that one major funding deal was secured in the country in 2022, and the deal was worth $2 million. 

It may be difficult to pinpoint what cryptocurrencies are most popular in the country. Recent data from CoinCecko indicates that the most popular cryptocurrencies in Ghana are Dust, Kava, and Bitcoin. 

Cryptocurrency regulations in Ghana 

Despite all the developments highlighted, there are some hurdles to cross before crypto goes mainstream in Ghana. One such hurdle is regulations. 

In December 2022, the Bank of Ghana made an announcement that it would start creating a framework for regulating the digital asset industry. This is a significant step for the nation, especially since regulators have cautioned against engaging in any cryptocurrency transactions as recently as the same year. 

The Bank of Ghana has also mentioned that it is currently examining global market trends and regulatory requirements while establishing regulatory bodies that will be involved in developing and implementing cryptocurrency regulations in the country. While this process is ongoing, cryptocurrencies are classified as Digital Assets rather than currency. There are no public records on the framework under development.

Regardless of the development of the framework, some regulators continue to discourage the adoption of cryptocurrencies. During a parliamentary session in 2023, Dr. Mohammed Amin Adam, the Minister of State in the Finance Ministry, reiterated the government’s position when responding to lawmakers’ questions.

Similar to Nigeria, the central bank has taken a keen interest in developing a central bank digital currency despite unfavorable cryptocurrency regulations.  

The Bank of Ghana has been testing its own version of a CBDC – eCedi for a while. The central bank announced that it  had partnered with Giesecke+Devrient (G+D) to pilot a general-purpose central bank digital currency (retail CBDC). The CBDC is yet to be launched. During the Bank of Ghana’s 11th Monetary Policy Committee press briefing in Accra on March 27, it was announced that the launch of eCedi has been postponed due to the country’s economic state and other related factors.

Where does Ghana go next? 

The Ghanaian cryptocurrency space is strategically positioned to capitalize on the existing interest, stable political environment, and growing frustration with the traditional financial system due to the economic downturn. However, companies and enthusiasts need to find ways to push for more favorable regulations as the country prepares to push government-issued digital currencies over more decentralized alternatives.  

Find out all that is being built in the Ghanaian cryptocurrency industry and the entire African continent at the Africa Money and DeFi Summit 2023

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