The Impact of the Digital Yuan Currency on Africa
As China takes active steps towards developing the digital yuan and introducing it to the world, you might wonder what this means for people living in Africa.
Africa is generally known to be backwards when it comes to technological trends, considering that they are a third-world country. However, that has changed in recent years as more people and companies in Africa have penetrated the tech industry globally. There are now more start-ups emerging from Africa with young people connecting with global tech companies and trends.
Cryptocurrency is still relatively new and more people are still trying to get a hang of it. But surprisingly, it has gained traction in Africa in the last few years. Crypto adoption is growing in Africa, which can be tied to several reasons, the most common being the currency devaluation and poor economic growth in most African countries.
What is the Digital Yuan Currency?
This is China’s version of digital currency that is controlled by its central bank, The People’s Bank of China (PBOC). Unlike other cryptocurrencies that we are familiar with, the e-Yuan works as a fiat currency and has what the PBOC calls “controlled anonymity”. There are also platforms such as the Yuan Pay Group to make trading e-Yuan seamless for everyone.
Should Africans be Concerned?
It’s no news that China is Africa’s largest bilateral trading partner. The trade between Africa and China has grown massively over the years, and the introduction of the digital Yuan currency might just have an impact. China has a deep rooted history and impact in Africa even in the technology sector. They have managed to build, service, and finance end-to-end internet experience and mobile smartphones in African countries.
However, Africans do not have to be concerned about how the digital Yuan would affect them, as it would likely be an advantage. Considering how Africans continue to embrace the digital currency movement, the digital Yuan might not be any different for most people. The major concern would then be the possible devaluation of Yuan which might affect trades and increase the prices of goods in Africa.
The Digital Currency Race
The digital currency race is here already and central banks and companies around the world want to develop their digital currencies. This is the future of finance but we’ll expect to see more developed nations going for it before central banks in Africa even consider it. So, we can expect one of these central banks or companies to lead Africa’s digital currency rate.
From the look of things right now and China’s affiliations with Africa, we are more likely to see China push a digital currency in Africa. Also, this would help with seamless payment amongst merchants to yield effective trades across continents.
Bottom Line
There’s an increasing rate of cryptocurrency adoption in Africa, especially in countries like Botswana, Ghana, Kenya, Nigeria, South Africa and Zimbabwe. More companies are willing to tap into emerging markets from Africa. China penetrating into the African market with its digital currency might just be a win for Africans.
