Since April 26, 2022, Bitcoin an official currency in the Central African Republic. Following the announcement, Central African President Faustin-Archange Touadéra said in a tweet: “Mathematics is the language of the universe. Bitcoin is the universal currency.” A whole program analyzed for franceinfo Afrique by Jean-Michel Huet, partner at BearingPoint and author of the book Afrique & numérique (Pearson).
math is the #Language of the universe.#Bitcoin is universal money.
— Faustin-Archange Touadera (@FA_Touadera) April 27, 2022
Franceinfo Africa: What is the challenge and interest for Central African Republic to legalize Bitcoin, a first on the African continent?
Jean Michel Huet: Even though there are very few countries that have done so, using Bitcoin allows for diversification of means of payment. The interest is in developing them for consumers and businesses that have previously only used cash. As electronic money, Bitcoin can be an element that contributes to financial inclusion, especially for women. People thus have a means of payment that does not require traveling and carrying money, bypassing the risks associated with such a business. The approach is very complementary to mobile payments. The peculiarity of the Central African Republic that made Bitcoin official – I think only El Salvador is part of the same approach – is that it made a risky bet. Bitcoin has the advantage of being able to be used worldwide, but has one major disadvantage, namely its enormously fluctuating value. In the last 12 months, Bitcoin has slumped a bit.
However, when we talk about electronic money, be it mobile payments or electronic central bank money, it is still something that allows citizens and businesses to have different means of payment. In countries that don’t have many banks, like Central African Republic, people don’t have many options other than cash. So, in absolute terms, offering them a new form of payment is a very good thing.
Isn’t it dangerous to use a cryptocurrency when your political situation is a source of economic and therefore monetary instability when you already benefit from a more stable currency, the CFA franc, which is pegged to the euro?
I think it’s a political decision that boils down to saying, “We no longer depend solely on the CFA franc.” But it also has a technical and practical dimension, as it is a quick-to-implement monetary option. However, this again raises the question of monetary risk as Bitcoin’s fluctuation remains highly speculative while the CFA Franc is stable. However, it should be noted that bitcoin is not a currency to keep unless one wishes to speculate, but I don’t think that is the priority for Central Africans.
The other choice that Central African Republic could have made is Nigeria. Namely the establishment of electronic money in blockchain format, and why not backed by the CFA franc. But it takes longer and is more expensive, unlike Bitcoin, which is easy to use.
What’s the point of adopting a cryptocurrency if the internet doesn’t always work well?
Broadband, 5G or 4G are not required. We don’t exchange video, just simple data. Basic telecom coverage, 2G is sufficient.
Can the Average Central African Use Bitcoin?
Yes, technically. All you need is a phone and a Bitcoin virtual account. However, money refers to an eminently sociological dimension. Currency and currency exchanges do not happen overnight. Mobile payment is a big hit in Africa, but it’s been fifteen years since it was launched. In France, in the 18th and 19th centuries, we had some setbacks with certain means of payment, including banknotes, not being immediately accepted. There may be a political decision in the Central African Republic, but that doesn’t mean consumers will embrace Bitcoin immediately. You must already understand how it works and have faith. Today I do not know if a Central African will immediately have confidence in this electronic money Bitcoin. I think that this action should be doubled by supporting the development of mobile payment in CFA, which is the easiest and least dangerous electronic payment method for the citizen today.
Where do African countries generally stand in relation to cryptocurrencies?
The majority strategy that we find today is to have electronic currencies from central banks that are recognized and backed by the states. They are published by central banks using the same technology as cryptocurrencies. But these currencies are not cryptocurrencies because they are guaranteed by a state. They are not private currencies. It’s more reassuring for people, but its implementation won’t happen overnight, unlike Bitcoin, which only needs to be recognized as a means of payment to be functional. There is a third way that is complementary: it is simply to encourage the development of mobile payments.
Why are cryptocurrencies of general interest to African countries?
The system can be set up overnight! If you have financial partners who are somewhat excluded from the global exchange and whose currency is no longer widely accepted, this is another way to trade with them.