Across nations, there is constant uncertainty and fear regarding legalizing cryptocurrency and its impact on sovereign economies, amid this doubt, the African Blockchain Report published by CV VC and South Africa Standard Bank highlights a new belief of confidence in the crypto ecosystem.
According to the report, blockchain funding in Africa raised a total of $474 million in 2022 from $90 million in 2021 highlighting a 429% year-on-year increase from 2021 to 2022. This growth in the funding sphere outshone the 4% global average.
As per the report released, the African Blockchain funding outrightly manifested a growth rate that was over 12.5 times higher than that of general African venture funding, the report mentioned the increase in the growth of venture funding as 34%. The report further adds that blockchain deals increased by 12% year-on-year basis.
African blockchain venture funding made up 1.77% of global blockchain venture funding and saw an expounding increase of 407% year-on-year basis. There are other countries and continents as well that contributed to the surge. Here, The United States accounts for 57%, Europe for 18.2% and Asia for 17.7%. The US surrendered 10% of the year-on-year share of the sector to Asia.
Report States, in the year 2022 Seychelles and South Africa were responsible for 81% of blockchain venture funding in Africa, where Seychelles accounts for $208 million and South Africa for $177 million.
The report further indicates the countries receiving blockchain start-up funding the most and Nigeria topped the list accounting for 3.4% of all funding followed by South Africa, Seychelles and Kenya. It is quite strange to see a country lacking basic human amenities ranked as one of the lowest in the Human Development Index published by the United Nations receiving the highest funding.
In consonance with the report, there is a significant increase in funding as compared to a relatively minor increase in the deals. Apart from this, fintech and blockchain infrastructure is the second most funded category while development is the third most funded category with 24% and 16% funds raised respectively.
As per a report published earlier by Bloomberg despite the increase in venture funding in Africa stalled growth and currency devaluation are significant problems in most of the developed economies of Africa leading to restrictions on funding to start-ups in Africa. A recent example is the closure announcement of LazerPay, a B2B crypto payments company.
Similar to other nations, even African countries have issues of regulation and problems with implicit and absolute bans. For example, cryptocurrencies are not illegal in Nigeria but banks are banned from transactions. Nigeria is currently working on its finance bill to make crypto rules formal.
Another African country, Ghana calls cryptocurrencies digital assets and is still working on the formulation of rules. According to a report published by Chainalysis, an analytics firm mentions country may compete with other African countries such as Nigeria to bring cryptocurrencies on the floor. An earlier statement by the CEO of a P2P platform, Paxful points towards the need for it to meet economic trends. On the other hand, South Africa Reserve Bank issued guidance for implicitly legalizing cryptocurrencies.