President Faustin-Archange Touadera of the Central African Republic said on Sunday that cryptocurrency is the solution to tackling financial exclusion.
Cryptocurrency is an alternative to cash,” Touadera said at the launch of her country’s crypto initiative Sango after it became the first African state to legalize Bitcoin in April. “For us, the formal economy is no longer an option.”
The move to adopt cryptocurrencies in a country where internet use is low and electricity unreliable has raised eyebrows among crypto experts, puzzled lawmakers and residents, and drawn words of caution from the International Monetary Fund.
Crypto In CAR : The Sango Project
The Sango project, including a “Sango Coin”, was backed by the Central African Republic’s National Assembly and spearheaded by Touadera, who said the token would provide access to the country’s “mountain” of natural resources, including gold and diamonds.
The country’s “Sango” initiative says that it will “facilitate the tokenization of Central African Republic’s resources for worldwide investors”. “Sango Coin will be the currency of the new generation of the Central African Republic,” Touadera said, without providing specifics.
The Central African Republic’s enthusiasm for cryptocurrencies appears unaffected by recent losses in their values, with the bitcoin price falling over 58% in the past three months, according to Refinitiv.
Key Observations
By adopting Bitcoin as a legal currency, the Central African Republic (CAR) shocked the world. This small African nation was not expected to follow in the footsteps of El Salvador, which last year became the first country in the world to make Bitcoin a legal currency.
But several factors may make the CAR a logical destination for Bitcoin adoption. The CAR has one of the lowest gross domestic products (GDPs) in the world. Its population, for the most part, is kept outside of the financial system and unwillingly shielded from technological developments like smartphones and the internet.
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Intrigued by the conditions of the second country in the world to adopt bitcoin as formally-recognized money, a cohort of Bitcoin experts and enthusiasts, calling itself the Bitcoin Delegation, flew to the Central African Republic to understand more about the situation on the ground and to see how it could help enlighten CAR officials on ways to leverage Bitcoin for good.
The delegation that traveled to the CAR includes Burley, El Bawab, Gouspillou, Oren, Busnel, Cadignan, and Wanzavalere.
Burtey, CEO of Bitcoin banking software company Galoy, the developer of the Lightning wallet utilized by El Salvador’s Bitcoin Beach community, spoke with Bitcoin Magazine to share the findings of the group’s recent trip to the Central African Republic.
Lack of Infrastructure
“The first thing that is striking is that there is no infrastructure in the country,” Burtey said. “Meaning that there is barely electricity or internet in the country, even if you’re in the capital city.”
As of 2009, less than 1% of the CAR population had access to banking services, according to a study by the International Monetary Fund (IMF). By 2017, account ownership at a financial institution or with a mobile-money-service provider was 13.75% of the population aged 15 years or more, per World Bank data. For comparison, the percentage of El Salvador’s population with access to the banking system was around 30% that year.
World Bank data.
Also according to the World Bank, the Central African Republic’s population has precarious access to electricity and internet. As of 2020, only 15% of the population had access to electrical power in the country and 10% used the internet.
When it comes to mobile cellular subscriptions, only 38 in 100 people in the CAR had one as of 2020. Internet access is even worse when considering fixed broadband access the country sees only 0.01 per 100 people with a subscription to such a service.
While some marginalized communities have been able to fight through adversity and leverage bitcoin for financial empowerment, nationwide adoption of the P2P currency depends on at least some minimal infrastructure.
Notably, satellite-powered solutions such as Elon Musk’s Starlink could aid the CAR in increasing its internet access. Musk recently flew to Brazil to launch the service in the Amazon rainforest, a push to increase access to the internet connection in that rural and isolated area.
Bitcoin Infrastructure Company Block stream also provides satellite-based solutions, specifically geared toward Bitcoin.
Its Block stream Satellite broadcasts the Bitcoin blockchain around the world 24/7 for free, protecting against network interruptions and providing areas without reliable internet connections with the opportunity to use Bitcoin. However, receiver equipment costs could be a barrier for the CAR.
Poor Understanding
In addition to a lack of infrastructure in the country, there is also a deficit of proper understanding of Bitcoin.
Government officials and the population at large don’t yet grasp the power of Bitcoin. It seems only the CAR president, Faustin-Archange Touadéra, really possesses knowledge about the peer-to-peer currency. These phenomena have led the nation to put the cart before the horse effectively.
“My understanding is that the president is the one who decided to adopt Bitcoin,” Burtey told Bitcoin Magazine. “He has a PhD in mathematics with a focus on cryptography. But many other members of the government, pretty much everyone, don’t really understand the difference between ‘crypto’ and Bitcoin.”
Much of the Bitcoin Delegation’s work was in improving that lack of basic understanding. Burtey explained to Bitcoin Magazine that in its conversations with government officials, the group attempted to demonstrate why the nation would be better off focusing on Bitcoin alone instead of embarking on the novel, esoteric use cases promised by tokens and “crypto.”