How People Are Using Bitcoin in Africa
- People just want access to Bitcoin
- Remittance companies are main customers
- Bitcoin for businesses operating across Africa
On a recent episode of Epicenter, BitPesa CEO Elizabeth Rossiello discussed how her company uses bitcoin to enable new payment flows in and around Africa.
BitPesa is an online payment platform that leverages the Bitcoin blockchain to lower the costs of money transfers to, from, and within sub-Saharan Africa.
During her interview, Rossiello shared BitPesa’s three main types of customers with co-hosts Brian Fabian Crain and Sébastien Couture, while also pointing out that the current fees and network congestion seen on the Bitcoin network aren’t much of an issue when compared to the banking options available around Africa,.
1. People Who Just Want Access to Bitcoin
The first type of customer Rossiello mentioned during her interview was those who just want access to the bitcoin asset.
According to Rossiello, use as an investment and buying games online are two reasons why someone in Africa would want some bitcoin. Recently, The Wall Street Journal also reported on the use of bitcoin by Kenyan students for deposits and withdrawals at online gambling websites like Bovada.
BitPesa is headquartered in Nairobi, Kenya.
Rossiello said people who just want access to some bitcoin account for roughly 15% of BitPesa’s business, although that number can move down to 5% or up to 20% depending on the time of the year.
“Most of those guys are buying in bulk,” added Rossiello.
2. Remittance Companies
According to Rossiello, remittance companies account for the largest portion of BitPesa customers.
“These are guys that have no other way to buy African currencies in multiple markets,” explained Rossiello.
The CEO went on to say that there are two types of remittance companies in Africa. First, there are the Western Union or MoneyGram types that just try to get in as many physical locations around the world as possible. Then, there are the other 300 or so remittance companies that work with partners in each local market.
“For [the other 300], they come to us, and once we figure out a fund flow where they pay us either in bitcoin or they pay through a bitcoin broker that comes to us — sometimes they just send fiat — they’re like, ‘Where can you take us? BitPesa, where are you available?’” explained Rossiello. “And if we show them a new market that we just opened up, they’ll market it.”
According to Rossiello, BitPesa has helped new remittance companies come to market and already-existing remittance companies reopen in markets they had abandoned because the bitcoin-focused payments business can enable a lower operating cost structure.
3. Businesses Operating Across Africa
The third and final type of BitPesa customer covered in Rossiello’s interview with Epicenter was more general businesses operating across Africa. Sometimes the company is enabling more efficient payment flows between two African countries, while other times the payments are intercontinental.
“They have crazy high rates because [some] currency pairs are not available,” Rossiello said of businesses trying to accept payments between specific countries in Africa. “Using our model and our own infrastructure, we’re actually able to offer currency pairs that didn’t exist before.”
Much like the remittance use case, BitPesa can help businesses accept payments in new markets or reopen in abandoned markets because they can now more easily accept payments in different currencies.
In terms of intercontinental situations, the company helps improve the payment flows of businesses that need to send or receive payments with people in China, Korea, Dubai, and elsewhere.
In the case of China, Rossiello provided an example of someone who was exporting goods to China but had to wait four weeks for payments to clear — typing up the business’s cash in the process. The company was able to provide this business with a quicker option for payments.
Rossello also discussed an alternative cash flow structure BitPesa enabled for mechanics in East Africa who import parts from Korea and Japan.