Binance in Uganda : Banking the unbanked

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In recent times, access to banking has improved significantly and there have been lots of Fintech startups trying to solve problems related to the lack of financial structure on the African continent. However, there is still a lot of work that needs to be done, and currently, nearly 80% of the continent is unbanked. The question still remains: How can the unbanked continent become banked?

Blockchain might be the solution.

On August 31st 2018, Binance’s Labs Director Benjamin Rameau has stated that the company’s expansion strategy has been centered around Africa and is betting huge on the world’s youngest population gaining increased access to technology and opportunities.

Africa’s blockchain potential still remains untapped and at current times, Africa is being referred to as the “Unbanked continent”. However, things might not be the same in a near future.

The last couple of years has seen a great penetration of mobile technology on the continent. The efforts of M-Pesa, the biggest mobile payment platform in Africa, has also paid off big time. It introduced a seamless way for Africans to transfer money from one mobile phone to another. Furthermore, their increasing customer base has shown the willingness of the continent’s inhabitants to participate in transforming a currently flawed financial system. As of today, the company boasts more than 30 million users on more than 10 countries and is currently growing at a rapid pace. Hopefully, the implementation of blockchain technology is not far away for the company.

What rôle does Binance play in all of this?

Binance wants to be at the forefront of a technological revolution in Africa.

As many already suspect, the financial sector is certain to be the first sector to be affected by this adoption.

The impact of blockchain technology on the continent will be invaluable and transformative. Africa currently has a problem with its financial and economic structure. Its people are currently unable to reap the benefits of an economically healthy system, as seen in developed countries, due to lack of proper governance.

In theory, a healthy economy and a stable financial system should aim to offer employment opportunities to its population and serve as a vehicle for creating and preserving wealth. As of 2018, some countries in Africa, like Congo, have unemployment rates as high as 46,10% compared to a global average of 5.52%. Also, amongst the 2 billion unbanked people in the world, more than 17% comes from Africa. Things need to change and fast.

In the August 28 publication by the director of Binance Labs, he states that inflation is currently acting as a tax for the people of the continent because of their very small incomes. Although an indirect form of tax, it takes purchasing power from the already financially weak people. Fortunately, Binance wants to do something about the situation.

Some of the important problems the company is looking to tackle are :

  1. Cryptocurrency has the potential to completely recreate the current financial system and offer more opportunities for young people living on the continent. Not only will it offer financial education on retirement and savings, but they will also offer financial services, such as borrowing and lending capital in order to fund disruptive startups. In essence, it will try to modernize the African economy.
  2. They are aiming for scalability. Due to outdated, colonial-era barriers and restrictions, it is often easier and less expensive for an African country to trade with a European country than with its neighbour next door. By implementing its blockchain technology in Africa, it will reduce barriers and trading cost to new lows and allow people to reap the benefits of intercontinental trades.
  3. The growth of blockchain technology will also allow itself to become the financial backbone of many underdeveloped countries. For citizens of countries in which monetary credibility has been lost, cryptocurrency offers a more reliable and safer alternative to local fiat. The technology has started gaining some serious attention from certain governments that are facing inflation crisis.
  4. Last but not least, cryptocurrency is redefining what it means to be banked. With the existence of virtual wallets and upgraded security, people now have an alternative way of being banked without relying on centralized institutions and government. The traditional approach of banking might not be the best way for the African population to be banked. Many have reported that when creating bank accounts, regulations and paperwork have been the main obstacle for them not having a bank account. Additionally, we have seen that in many oppressive countries many people such as women are banned from opening bank accounts.

Since its inception in Uganda, we are seeing some positive news!

Earlier this week, various news site has reported that within a week, more than 40,000 users in Uganda have signed up on the platform since its inception. This is great news for blockchain adoption and brings us a step closer in creating more opportunities on the young continent.

As a last reminder, Mr Rameau, director of Binance labs, mentions that as a decentralized organization, binance sees itself as much of an African company, than it is Asian or European.

“Binance Labs is a decentralized organization. We have no headquarters, no office and no geographical boundaries. In Africa, we feel very much at home and we want to deploy our capital there. “

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