Since April 26, 2022, bitcoin is 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 Africa & digital (Pearson).
Mathematics 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 the interest for the Central African Republic to legalize bitcoin, a first on the African continent?
Jean-Michel Huet: even if there are very few countries that have done so, using bitcoin makes it possible to diversify the means of payment. The interest is to develop them for consumers and companies which, until now, have only used cash. As an electronic currency, bitcoin can be an element that contributes to financial inclusion, especially for women. People thus have a means of payment that does not require them to travel and carry money, thus circumventing the risks associated with such a business. The approach is very complementary to mobile payment. The specificity of the Central African Republic which formalized bitcoin – I think only El Salvador is part of the same approach – is to have made a risky bet. Bitcoin has the advantage of being able to be used all over the world, but it has a big disadvantage, namely a value that fluctuates enormously. Over the last twelve months, bitcoin has collapsed a little bit.
However, when we talk about electronic money, whether it’s mobile payment or central bank electronic money, it’s still something that allows citizens and businesses to have different means of payment. In countries where there aren’t many banks, like in the Central African Republic, people don’t have many choices apart from cash. As such, offering them a new means of payment is a very good thing in absolute terms.
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 amounts to saying: “We no longer depend solely on the CFA franc.” However, it also has a technical and practical dimension because it is a monetary option that can be quickly implemented. But this raises, once again, the question of the monetary risk because of the fluctuation of the bitcoin which remains very speculative while the CFA franc is stable. However, it should be noted that bitcoin is not a currency that can be kept unless you want to speculate, but I do not think that is the priority for Central Africans.
The other choice that the Central African Republic could have made is that of Nigeria. Namely, setting up 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 easily operated.
What is the point of adopting a cryptocurrency when the internet does not always work well?
There is no need to have broadband, 5G or 4G. It’s not video that we exchange, it’s very simple data. Basic telecom coverage, 2G is enough.
Is the average Central African able to use bitcoin?
Yes, technically. All you need is a phone and a virtual bitcoin account. However, money refers to an eminently sociological dimension. Changing currency and means of payment does not happen overnight. Mobile payment is a huge success in Africa, but it’s been fifteen years since it was introduced. In France, we had some setbacks in the 18th-19th century with certain means of payment, including banknotes, which were not immediately accepted. In the Central African Republic, there may be a political decision, but that does not mean that consumers will immediately adopt bitcoin. You have to already understand how it works and have confidence. Today, I don’t know if a Central African will immediately have confidence in this electronic money that is bitcoin. I think that this measure should be doubled with support for the development of mobile payment in CFA which is today the simplest and least dangerous for the citizen to have a means of electronic payment.
Where are African countries generally with regard to cryptocurrencies?
The majority strategy that we find today is to have electronic currencies from central banks, recognized and secured by the States. They are published by central banks that use 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 their implementation does not happen overnight, unlike bitcoin, which just needs to be recognized as a means of payment for it to be operational. There is a third way which is complementary: it consists in simply encouraging the development of mobile payment.
Why are cryptocurrencies of general interest to African countries?
The system can be set up overnight! Moreover, if you have financial partners who are somewhat excluded from the global field of exchanges and their currency is no longer widely recognized, this is another way of exchanging with them.