Web3 in Africa: Regulatory Challenges Impede Potential Transformation
As Africa‘s Web3 landscape gains momentum, it faces significant regulatory hurdles that threaten to stifle its transformative potential.
Jathin Jagannath, a developer advocate for Cartesi, a Web3 rollup protocol, has pinpointed regulatory uncertainties as a major obstacle in Africa’s Web3 journey.
The absence of clear, well-defined regulations surrounding Web3 technologies creates hesitancy among potential users and investors.
Jagannath said that regulatory ambiguity may result in a reluctance to fully embrace the revolutionary possibilities offered by Web3.
“With regulatory clarity, enhanced digital literacy, and infrastructural upgrades, we will see Africans overcome these obstacles and lean into rapid modernization,” Jagannath said in a recent interview.
Africa indeed represents a fertile ground for Web3 adoption and innovation.
A report by PricewaterhouseCoopers and Emurgo Africa on Web3 in the continent revealed that blockchain funding across Africa surged by a staggering 1,668% in 2022.
Leading the charge in Web3 adoption are countries like Kenya, Nigeria, and South Africa.
However, despite its immense potential, Africa faces challenges in education and knowledge accessibility.
Jagannath pointed out the critical need for improved digital literacy. The developer highlighted that a skilled workforce and user base are paramount for the successful integration of Web3 technologies.
Awosika Israel Ayodeji, program director of Web3bridge, further underscored these challenges in education and knowledge access for African developers.
Ayodeji said that high poverty rates often drive individuals to prioritize trading over comprehensive learning.
To address these issues, Cartesi and Web3bridge have joined forces to launch an eight-week Cartesi masterclass in Nigeria in early January 2024.
Africa’s Web3 Ecosystem Has Immense Potential
Africa’s potential for a Web3 boom in 2024 and beyond is undeniable.
Factors such as its youthful demographic and volatile currency make it ripe for Web3 adoption, as highlighted by Jagannath.
Nevertheless, according to the Oxford Business School, nearly 24% of Africans remain excluded from the traditional banking system.
Jagannath envisions Web3 as a solution to these challenges. To him, decentralized wallets and other Web3 applications can address current issues. What’s more, the tech can usher in transformative changes in how Africans interact with financial systems and engage in cross-border trade.
CBN Approves Africa Stablecoin Consortium to Pilot cNGN Stablecoin
Just recently, the Central Bank of Nigeria (CBN) granted approval to the Africa Stablecoin Consortium (ASC) to launch the cNGN stablecoin in its regulatory sandbox.
The stablecoin is set to be introduced on February 27, 2024, the Africa Stablecoin Consortium, a collaborative effort between Nigerian banks and fintech operators, said in a recent announcement.
The consortium detailed that the cNGN stablecoin adheres to the regulatory requirements and standards established by the Central Bank of Nigeria, the Nigerian Securities and Exchange Commission (SEC), and the Nigerian Financial Intelligence Unit (NFIU).
The consortium emphasized its commitment to engaging with regulators to ensure compliance, consumer protection, and transparency throughout the project.
Notably, the cNGN stablecoin is designed to complement, rather than replace, the eNaira, which was introduced by the CBN with broader capabilities.
The Africa Stablecoin Consortium will oversee the cNGN stablecoin, which is currently interoperable with strategic blockchains such as Bantu and BNB Smart Chain.
