Bitcoin Around the World: South Africa

By Ian Jackson Mar 9, 2015 9:04 AM EST

LONDON (InsideBitcoins) — South Africa may not be a country that immediately springs to mind when one starts to mull over the regional potential of bitcoin. It’s one of those countries that doesn’t quite fit into any of the more familiar pigeonholes; an emerging economy that ranks 30th in terms of PPP adjusted GDP, it’s much lower per capita ranking of 67 might seem to the uninitiated, baffling. One of the downsides of even a passing interest in cryptocurrencies rests in the multidisciplinary approach one has to take in forming a rational framework of understanding. Riding high on the list of “need to know” items is a passing understanding of economics.

South Africa Bitcoin

Image via arboresce.

Take the Gini coefficient for example; whilst not quite as frightening as it sounds it’s one of those indicators that has more to do with bitcoin than you might think. Simply put, it’s a measure of wealth distribution or rather the inequality of said distribution. A rating of 100 would mean that all of the wealth of a country was owned by a single person, and nobody else would have so much as two beans to rub together. Such a rating has, thankfully, never existed, but South Africa’s rating of 65.0 is absurdly high. It remains the second most unequal society on the planet with the neighboring country of Namibia taking the top spot.

With so much wealth concentrated in the hands of so few, the much touted rising economy of South Africa becomes a meaningless badge of distinction to the vast majority of the country’s 54 million inhabitants. A quarter of all South Africans are living on less than $1.25 a day and with such low income comes the predictable mix of disadvantages: no access to credit, no access to financial services, no pensions, and so on; the list is depressing, the subaltern of South Africa would no doubt agree.

Bitcoin’s role in South Africa

This is not to say that there is no light at the end of the tunnel. The sun has set on the legacy of apartheid, and though reconstruction has been a road strewn with obstacles, the foundations have been laid. Bitcoin is often thought of as the province of an eclectic mix of the tech geeks, the political radicals, self-styled anarchists and cautious investors. It’s a project born from these groups, yes, but to assume that it is immune from the vicissitudes of serendipity is a fool’s game; bitcoin can find fertile soil in unlikely places. A few test runs on common garden methods of sending money to and from South Africa reveals stumbling block after stumbling block. And no, it’s not just the waiting time. People without banks of their own have to arrive in person to collect the money and this can be an unwelcome expense for those living in rural areas. The fees may not be prohibitive when transferring large sums, but for those people living on $50-$60 a month, crippling fees as high as 6.9% are not just unacceptable.

Stellar’s plans for South Africa

Non-profit organizations, such as Stellar, are intent on addressing such issues. Their plan to bring digital wallets to young girls in South Africa is the part of the overall cryptocurrency vision that is so often not reported in the mainstream press. Stellar, which is a fork of Ripple, is to be integrated with African favorite Vumi an open-source messaging platform. The combination of these two services leads to a premise that is beautiful in its simplicity and, frankly, heartwarming. The foundation plans to “offer young South African girls the chance to start a digital savings account that uses an alternate currency they’re likely to swap: airtime minutes.”

This sort of project may not sound like a big deal, but Forbes was recently able to articulate young girls’ ability to bring change to developing countries around the world:

“When girls save, they spend their savings in ways that end up generating additional income, furthering their education, and improving the nutrition and health of their families. The resulting ripple effect can lift entire communities out of poverty. Saving not only improves the financial wellbeing of girls but also nurtures positive attitudes and expectations, building self-esteem and driving productive behavioral changes.”

Can bitcoin help cultivate change in South Africa?

Stellar South AfricaPerhaps such a sentiment isn’t specific to South Africa. Perhaps such catalytic effects could be felt anywhere, and yet, the beauty of bitcoin lies not in its versatility but in the innovative ways it is put to use. South Africa has beauty too, a wild and sometimes dangerous place it’s also blessed with cultural treats that stretch back to the very dawn of humanity’s existence. Huge swathes of the country lie untouched, preserved and bestial. They serve as a reminder to us all of where we came from and where we might one day end up again if we don’t start addressing some of the more apocalyptic problems of the 21st century.

Look for a fault in any given country and you’ll find a dozen before you’ve had a chance to blink. For South Africa, its dismal ranking on the Gini coefficient is more than just a sad little number on a screen; it’s an issue that effects people, real people, in ways that outsiders can’t even begin to properly comprehend. Bitcoin can’t fix these things, not overnight to be sure. But it can give it a little nudge in the right direction. And enough nudges can one day move mountains.

Featured image via Nicolas Raymond.

Ian Jackson is an Inside Bitcoins correspondent based in the U.K.

  • There is SO much more to say about bitcoin in South Africa, a little disappointing that not much of anything really said

  • Gareth G

    more PR hunters with no real product or understanding of Africa, Africans, banking or business in Africa, next thing will be all the remittance nonsense again?

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