The growing preference for digital currencies and mobile money could spell the end of cash in Africa. But will it be possible for the most popular payment method in most countries on the continent to disappear like it never existed?
Central banks may be backing the digital platform prominence in most countries and likewise the extensive usage of mobile money, but it is unlikely for the era of cash to come to an end.
Cash was the most popular payment option in online retail in Morocco, Egypt, and Kenya in 2021, accounting for 74%, 60%, and 40% of total transactions, respectively. On the other hand, cash was not widely used in Nigeria, where 35% of e-commerce payments were made by card and 21% by bank transfer. In South Africa, 43% of digital buyers used card-based payments and e-wallets.
The economic and government sector of most African countries will help tremendously in backing and continuing cash payments over the unprecedented digital platform.
How Africa’s Economic System Will Keep Cash Alive
The digital space has helped in making transactions more seamless and faster. It has also helped alleviate poverty in most African countries, thereby reducing the repercussions of the COVID-19 pandemic.
However, not everyone in Africa is tech knowledgeable. For example, in a country like Nigeria, where public transport involves bus conductors who are used to collecting cash from passengers, it will be challenging to use a digital means of payment in such a situation unless a solution will be built towards that problem. It is still likely not to work because transport spaces in Nigeria depend heavily on their physical cash.
Governmental Policies will Keep Cash in the Ecosystem
While some governmental bodies may be embracing the use of cryptocurrencies and use of digital platforms, in their country, some other countries are banning the method.
On February 6, the Central Bank of Nigeria (CBN) released a ruling ordering all financial institutions to halt crypto transactions and refrain from trading with crypto businesses.
Other countries like Egypt and Algeria have also banned cryptocurrencies primarily because the platform is unregulated.
These developments will stall the pace of cryptocurrency adoption in Africa, all the while ensuring cash stays relevant.