Opinion by: Ure Utah, technical advisor to Nigeria’s minister of innovation
As the valuation of digital currencies approaches $4 trillion, the global community rushes to capitalize on the trend. While figures like Elon Musk with Dogecoin (DOGE) and the US president’s Official Trump (TRUMP) coin make headlines, Africa stands at the forefront of this financial revolution.
This moment is critical. Without decisive regulatory action by African leaders to manage or leverage cryptocurrency, the outcomes will dictate whether the continent’s 1.55 billion residents gain more control over their future or fall into a renewed cycle of financial turmoil.
The potential is immense. Utilizing cryptocurrencies could open new capital sources, redirect remittance flows, and possibly transform the entire sovereign debt marketplace. Currently, African nations owe the International Monetary Fund (IMF) $42.2 billion—approximately a third of its total lending, with Egypt alone responsible for a notable $7.42 billion.
These obligations burden national budgets and stifle growth initiatives.
The high-risk gamble
However, the associated risks are substantial. A widespread shift to stablecoins could siphon deposits away from local banking institutions, undermining the monetary stability upheld by central banks. Africa’s most vulnerable currencies—such as those in Sierra Leone, Uganda, and Guinea—could falter under such volatility.
Cryptocurrency purports to democratize finance. Yet, akin to many disruptive innovations integrated into global capitalism, it claims to promise inclusivity while often perpetuating exclusion. Evidence suggests it is widening the wealth gap.
The African risk rating
The stakes for Africa are undeniably high. The continent’s youthful population and rapidly growing economies—like those of Niger and Senegal—present opportunities. Yet, insufficient regulatory frameworks and limited financial literacy leave those least equipped to handle risks most vulnerable.
If the annual remittance flows, valued over $95 billion to Africa, transition onto blockchain platforms, traditional banks and regulators may be rendered obsolete, fundamentally altering monetary policy in numerous countries.
Consider the differences. In the US, Trump’s supportive crypto regulations have bolstered American borrowing capacity by linking stablecoins to Treasury markets, with Tether managing over $120 billion in government debt. In Europe, regulatory frameworks shape tokenization efforts closely. Meanwhile, China leverages its digital yuan to extend influence amongst Belt and Road partners.
Africa lacks similar protections, making it critical for its leaders to act swiftly to manage cryptocurrency, minimizing dependence on IMF bailouts, alleviating sovereign debt concerns, and enhancing Africa’s capacity to fuel growth independently.
A framework for regulatory evolution
Implementing robust regulation is not merely advantageous; it is essential for safeguarding citizens against fraud while instilling investor confidence in African blockchain initiatives. In doing so, Africa could attract billions from global environmentally, socially, and governance-aligned investments (estimated to reach $35 trillion-$50 trillion by 2030).
Investment in financial education and decentralized finance (DeFi) competencies is urgently required, allowing communities to navigate digital assets responsibly. Additionally, tokenized infrastructure projects can harness cryptocurrency for public benefit.
Real-life lessons from the world beyond Africa
Examples exist to emulate. The World Food Programme’s Building Blocks project utilized blockchain for cash distribution to vulnerable groups, including Syrian refugees in Jordan, redeemable in local markets via iris scan technology. Last year, this initiative assisted 65 organizations, improving aid efficiency and saving $67 million.
Models can also be observed in the Global North, where innovative uses of crypto and blockchain for social good are already realized. Estonia’s blockchain-based e-voting has strengthened voter trust, minimized fraud, and expedited outcomes. US-based Climate Collective tokenizes rainforests and other natural resources to protect ecosystems and monetize carbon reduction efforts. These instances reaffirm a fundamental insight: cryptocurrency can serve communities positively, beyond mere market speculation.
Related: The one thing these 6 global crypto hubs all have in common
Earlier this year, the $210-million Immaculata Living Project launched in Chicago—the largest university-backed, crypto-powered real estate venture globally. This collaboration between private entities and the American Islamic College operates as both a social enterprise and a commercial enterprise.
This dual approach is significant. By intertwining profit with purpose, Immaculata illustrates how cryptocurrency can yield community benefits while attracting investors. Amid a sector often criticized for speculation, it presents a framework for how digital finance can support sustainable and socially beneficial initiatives.
The redevelopment aims to rejuvenate the deteriorating, century-old Immaculata campus and introduce a 22-story tower featuring numerous senior living units and residences for young professionals—complete with on-site catering, wellness activities, care services, AIC courses, and a diverse range of programs.
From experimentation to implementation
This represents an opportunity to democratize property ownership through cryptocurrency, permitting individuals to invest in shares of apartments they can afford. This model facilitates direct investment and wealth creation in a strictly regulated manner.
Crucially, the Immaculata initiative aspires to exemplify the use of digital currency as a means for private investment and public benefit, generating 50 new jobs, enhancing access to education, and fostering a cohesive community that unites diverse generations and faiths—without tapping into taxpayer resources.
Tokenization need not remain confined to Western experiments. Housing developments in Lagos, renewable energy projects in Nairobi, or new academic institutions in Accra could secure financing this way, allowing global investors to participate while enabling local populations to partake in returns.
African leaders must capitalize on this opportunity to redefine capital frameworks—failing to do so risks allowing digital finance to exacerbate inequalities between the affluent and the disadvantaged.
Opinion by: Ure Utah, technical advisor to Nigeria’s minister of innovation.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
