Africa gets a lot of praise for the level of adoption it has recorded in recent times. During most of these discussions, countries like Nigeria, South Africa, Ghana, and Kenya are usually highlighted as the key markets for financial technology on the continent. Considering this, most people would expect investors and innovators alike to bet on one of these states as Africa’s next frontier of tech innovation. Some analysts have traveled that path, calling cities like Nairobi, Kenya, or Lagos, Nigeria, the tech hub of the continent. Surprisingly, Vitalik Buterin, co-founder of Ethereum, has a different opinion. Vitalik is betting on Zambia as the prime location for tech on the continent.
Zambia is usually coveted and known by many for its natural resources such as copper, and not for being a growing tech ecosystem. However, a group of young people is looking to change the country’s image, and according to a report by Bloomberg, they have the support of Ethereum co-founder Vitalik Buterin.
One of the most significant issues with growth in the tech space is the issue of regulations. There are so many instances where regulators have frustrated innovators. A recent example of this is the case of Dash, a Ghanaian fintech app that raised $32.8 million in seed funding only to receive an order from the Bank of Ghana (BoG) asking them to stop their operations. To combat the issue of regulations, startup founders are already in talks with the government about creating a regulatory environment that will attract more innovators. Plans are set for a conference in Lusaka, the capital city of Zambia, in May to draft a detailed policy document that will make Zambia the destination of choice.
Buterin expressed his support in a virtual meeting with Zambian President Hakainde Hichilema early this year. This came after Vitalik paid a visit to Zambia in 2019 as a guest of Mwiya Musokotwane, the son of Finance Minister Situmbeko Musokotwane. He was invited by Mwiya to see a new city outside Lusaka, which is another area looking to attract businesses.
Vitalik mentioned that he was impressed with what he saw in an interview: “I was impressed by everyone I met’s willingness to go and do big things.”
Reports indicate that more companies, including major African fintech brand Flutterwave Inc., are interested in making themselves known in the Zambian ecosystem.
The president of Zambia sees this as an important part of his political campaign, where he promised to increase jobs in the country. Most of the youth or people under the age of 24 have no source of income based on data from the International Labor Organization (ILO), with a worsening record every year since 2013. The emphasis on bringing jobs for the youth won Hichilema the election in August 2021 after five failed attempts.
With strong government support through the creation of a Ministry of Technology and open arms to prominent crypto names like Vitalik, Zambia could shock the rest of the crypto world in the coming months.
The strategy is already working in the broader financial tech space, with several Zambian startups raising capital. The latest of this is Zambian card-issuing fintech firm Union54, which raised $12 million in a seed extension round led by Tiger Global.
The State of the Zambian Crypto Space
To understand what the growth could look like in the coming months, we will have to look at the status quo. Some major cryptocurrency brands have launched in Zambia and have been met with some success. Nigerian-based cryptocurrency exchange YellowCard recently enabled Kwacha (ZK) deposits, allowing Zambians to buy and sell Bitcoin (BTC) and Tether USD (USDT) on the platform.
Google trends data indicates that the search term “Yellow Card” is a breakout keyword in Zambia, with current data suggesting that interest was at an all-time high in March 2022.
Data from Useful Tulips, a peer-to-peer trading analytics platform, shows an increase in trading from Zambia. In addition, the data shows a clear uptick in trading volume from two platforms, Paxful and LocalBitcoins.
The FOMO is so real that the Bank of Zambia (BoZ) released a statement concerning the heightened interest in crypto. However, unlike statements by other central banks in Africa, the Zambian central bank did not ask for the complete disregard of crypto but instead established the fact that there are no regulations and people engage in the sector at their own risk. Finally, the BoZ mentioned that it would look to implement regulation that enables innovation.
We will have to wait to see whether or not Zambia will be mentioned in the same conversation as crypto heavyweights like Nigeria and South Africa. But, for now, things look good, and Vitalik is bullish on Zambia.