Chapter 1: Decentralised Finance and Cryptocurrency Activity in Africa

Objective: Recently, there has been an increase in the use of cryptocurrency, decentralised finance (DeFi) applications and DeFi services in several countries. These innovations facilitate the delivery of financial services using smart contracts. DeFi encompasses all financial services that are built on public blockchains, based on open protocols and removes intermediaries from the financial intermediation process. There is significant cryptocurrency activity in Africa while DeFi developments are relatively new and unpopular in the African continent. This chapter introduces DeFi in Africa. It presents some statistics and data on DeFi in Africa. Thereafter, the potential benefits, challenges and regulatory issues associated with DeFi in Africa are presented.

Method: This study used literature reviews and external data sources to show the benefits and advantages of DeFi .

Findings: The findings show that there is low interest in DeFi in Africa. Some benefits of DeFi to African countries include increased liquidity for many small- and medium-scale enterprises (SMEs), new opportunities to raise additional capital to fund capital-intensive activities, usher in an era of smart contracts that are negotiated bilaterally without needing an intermediary, encourage peer-to-peer trade between economic agents in several African countries, enhance the efficiency of the Pan-African Payment Settlement System and encourage more trade between individuals and corporations under the African Continental Free Trade Agreement, among others.

Originality: This is the first chapter to examine DeFi in Africa.