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African countries are not strangers to the use of digital solutions for money transfers, nor to the rapid implementation of such technologies. However, approaches to financial technology regulation (fintech) in Africa have varied across countries. That's what Ashlin Perumall, a senior partner in the Corporate / M & A department at Baker McKenzie in Johannesburg, was part of the Blockchain in Africa panel at the Afro-Asia FinTech festival in Nairobi, Kenya. Kenya, June 15th.th – 16th July 2019.
Perumall said that the ubiquitous use of mobile telecommunications in Africa would have allowed the continent to overtake many first world countries. The use of mobile telephony has increased from less than 3% to 80% in less than 10 years and there is already an abundance of local mobile and electronic payment platforms that have seized this opportunity to develop innovative ways to facilitate the transfer of money to the continent. .
"In addition, sub-Saharan Africa has the second highest population of unbanked adults in the world, with about 350 million people, or 17 percent of the world's total population. Two-thirds of sub-Saharan Africans apparently do not have a bank account. Despite this, a high percentage of migrant workers, both in and between African countries, leads to a disproportionate need for remittance mechanisms outside traditional banks. And remittances remain the main source of income for many African communities and households, with countries like Lesotho apparently attributing nearly a third of their GDP to remittances from abroad. These factors, among many others, have created an ideal environment for new methods of value transfer and present many of the challenges that distributed ledger solutions are designed to solve, "he explained.
However, while the use of fintech is taking off in Africa, Perumall noted that African governments have so far reacted in a mixed way to the use and regulation blockchain and cryptocurrency in Africa.
"Some have adopted a positive attitude, seeking to understand the best way to regulate its use, while others have adopted a wait and see approach. Some governments, however, have been fearful and reserved, and in some cases, unresponsive to the use of this technology. Countries such as Zimbabwe and Namibia have reportedly started hard, while Mauritius is a regional pioneer. The regulatory sandbox created in Mauritius, for example, demonstrates a progressive approach to the general economic benefits that could follow a friendly, even incentive, approach to cryptocurrency, "he said.
Perumall said that in Kenya, the Mpesa mobile money transfer platform, piloted by Vodafone via Safaricom, had been set up as early as 2007, which had spurred the creation of other similar businesses in Kenya. the country. The broad success of the Mpesa platform has prompted the region to face new innovations in value transfer and blockchain technology is already being implemented in the country in many ways. The Kenyan government has established a task force to study the use of digital currencies and artificial intelligence. The Kenya National Land Commission, for example, recently welcomed the use of the blockchain system to make land ownership transparent, arguing that it would reduce fraudulent land sales and confusion over title deeds. And in the private sector, companies such as TMT Global Coin, a logistics company with a chain of blocks that uses blockchain technology as part of smart contracts to improve transparency and transparency. authenticity of import and export records are meeting more and more success. Even so, the Central Bank of Kenya has recently rejected the use of digital currencies because of their unregulated nature and no regulations have been issued so far.
In Nigeria, the Central Bank of Nigeria has not yet published any regulations. However, the Bank has announced its intention to publish its white paper on the use and regulation of cryptocurrency in the country. Until now, the country has opposed the use of cryptocurrency because of the risk of Nigerians being the victims of fraudulent schemes. The slow acceptance of cryptocurrencies by Nigerian regulators is remarkable, as Nigeria has the third largest bitcoin portfolio in the world as a percentage of gross domestic product, "said Perumall.
Perumall added that although there is still no specific regulation in South Africa, regulators who worked with the finance and banking industries have responded favorably to finding the most effective and appropriate way to regulate crypto-currencies in South Africa. He said the country is supportive of the concept of cryptocurrencies and is researching the effects of distributed virtual currencies in order to streamline the South African multi-option settlement system through the Khokha project.
"In 2018, the draft law amending the National Treasury Tax Legislation, 2018, proposed changes in tax legislation that, among other things, would change the way cryptocurrencies are clbadified in South Africa. And in December 2018, the South African Reserve Bank released its revision of the 1998 National Payments System Act of 1998 for public comment. This legislation governs the systems used by South Africans for the settlement of payments, and the SARB would intend to completely revise the regulations in force by 2020. The SARB seems to recognize that it could Soon there will be little difference between domestic and international payments, and is considering the possibility of similar digital currencies being in the future the heart of the national payment system. This could pave the way for a reduction in the exclusivity of commercial banks in the processing of payments and, ultimately, in the possibility of a South African digital currency, "he said.
"The South African Reserve Bank, the South African Revenue Service, the National Treasury, the Financial Sector Supervisory Authority and the Financial Intelligence Center have established an Intergovernmental Working Group on Financial Technology (IFWG). ), which has published a consultation paper on policy proposals on cryptographic badets. in January 2019. The GTCA's efforts are aimed at providing regulators and policymakers with a platform to engage with industry and work towards a harmonized approach to regulation. This is a first for the region, "he explained.
Mr. Perumall said that, regardless of the approach to regulation in African jurisdictions, the use of blockchain and cryptocurrency on the continent presented many opportunities. He noted, however, that it was clear that there were still significant challenges ahead.
"Given the speed with which this technology is adopted on the continent, African countries have great potential to develop regulations governing the use of financial technologies, with the aim of encouraging foreign direct investment in this sector, "he concluded.
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