China-Africa link getting closer with Bitcoin
A Kenyan startup’s new product that allows companies in Africa to send payments to China using Bitcoin is the latest in the line of digital currency-related initiatives that connect countries from both ends.
Bitpesa’s China scheme was launched this month to allow users in Kenya, Uganda, Tanzania, Nigeria and the Democratic Republic of Congo make online payments to clients in Asia – particularly China which is now Africa’s largest trade partner.
It makes payments for employees, distributors or suppliers possible without using cash or the US dollar as a middle currency.
So far in 2016, trade between China and Africa has been estimated at $220 billion, a rise from $170 billion in 2013 according to the World Bank.
Key issues the new scheme addresses are the high cost of sending payments from Africa to China which remains high and the timeframe required which often takes days for such transfers to settle on the other end.
Some China-Africa crypto-related initiatives have made the news of late but none has been so direct.
Earlier this year, Beijing-based Bitcoin mining giant Bitmain invested $1.6 million in Shenzen-based BitKan, a Bitcoin data and trading services provider, with a view to providing a platform for people worldwide especially those in non-mature Bitcoin markets such Africa to trade in the digital currency.
In September, a subsidiary of the Bank of China (BOC) was launched in Mauritius which has been touted to have the potential to be a “Blockchain Valley” for the continent.
Bitcoin has also been suggested as a plausible trading medium between China and African countries like Ethiopia where international transactions have increased of late for the buying of raw materials and to save on the foreign exchange required for the transfer of asset across borders.
Relatedly, another Bitcoin exchange with a wide network in Africa and a direct connection with Asian countries is BitX. It operates in Nigeria and South Africa as well as Indonesia, Malaysia and Singapore on the other end.
However, a key subject that is still creating a form of contention across the continent is the introduction of regulatory measures for digital currencies. Most African governments still view such currencies with caution.
The founder of Bitpesa, Elizabeth Rossiello, for example, hinted on the lack of cooperation between regulators and Blockchain players in Kenya at the recently-held Blockchain Workshop by the Coalition of Automated Legal Applications in Nairobi.
This will likely change in the coming years if moves by Uganda and Nigeria to discuss the possibility of regulating digital currencies such as Bitcoin is anything to go by. Then, we may get to see an expansion of similar services from parts of Africa to China.