Bitcoin is introduced into Africa's largest slum, with risks and rewards
Onesmus Many, 30, another garbage collector, said he feels safer with his money in a bitcoin wallet instead of in cash because of crime.
Some merchants have found benefits to accepting crypto, including Dotea Anyim. She said around 10% of customers at her vegetable stand pay in bitcoin.
“I like it because it is cheap and fast and doesn’t have any transaction costs,” she says. “When people pay using bitcoin, I save that money and use cash to restock vegetables.”
The possibility that crypto prices could keep rising also appeals to residents of Soweto West. Magak and Many said they now have around 70% to 80% of their net worth in bitcoin, a far higher level of exposure than most people.
“It is my worth and I’m risking it in bitcoin,” Magak said.
That concerns Ali Hussein Kassim, a fintech entrepreneur and chair of the FinTech Alliance in Kenya.
“In an extremely volatile asset like bitcoin, it’s overexposure. I can’t afford to lose 80% of my wealth. How about a guy in Kibera?” Kassim said. “You are exposing a vulnerable community to an ecosystem and to financial services that they can’t necessarily afford to play in.”
Kassim acknowledged the potential benefits that digital assets could bring, particularly in facilitating cheaper cross-border payments like remittances, but failed to see the benefit in Kibera.
Bitcoin’s volatility could negate the benefits of cheaper transaction fees, Kassim said, and bitcoin does not have the same protections as other financial services due to a lack of regulation.
Mdawida disagreed, calling bitcoin’s unregulated nature a benefit.
“We don’t shy away from the risks involved,” the AfriBit Africa co-founder said, noting the group’s investments in bitcoin education in Kibera, including financial literacy training and crypto courses in the community.
Efforts to introduce bitcoin into developing countries have faced challenges. Bitcoin was adopted as legal tender in El Salvador and Central African Republic but both countries have reversed their decision.
In Kenya, the digital asset sector has faced legal and regulatory challenges, including crackdowns on cryptocurrency giveaways. This small project, focusing only on Soweto West, has been allowed.
“On my phone I put notifications on when bitcoin rises … and it’s all smiles," Magak said. "Whenever it fluctuates up and down, I know at the end of the day it will just rise.”
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