The State of African Web3: Umoja Insights Issue #4

Get ahead with Umoja Insights, your one-stop destination for the most impactful trends shaping Africa's blockchain ecosystem. This isn't just a newsletter—it's your key to unlocking Africa's Web3 potential & the latest investment opportunities within the continent's blockchain ecosystem.

Backed by the trailblazing team at Umoja Labs , a pioneer in providing cutting-edge #Web3 fintech solutions, our insights offer an invaluable perspective on the financial frontier. We delve into the mechanics of the crypto market, demystify regulatory complexities, and spotlight game-changing tokenization opportunities from the innovative Umoja protocol.

Subscribe to Umoja Insights today—don't just keep up, lead the pack in understanding Africa's transformative blockchain landscape. Stay informed. Stay ahead. With Umoja Insights, you won't miss a beat.

Africa's Crypto Markets

To date, based on data from Triple-A , there are approximately 40.3 million cryptocurrency owners across Africa. The average #Web3 and #crypto regulatory environment across the continent is rather nascent, marking a BRAF (Blockchain Regulatory Assessment Framework, developed by Umoja Labs ) score of 26.78 out of 100. The continent's regulatory environment, which has largely been focused on regulating cryptocurrency secondary markets, is still developing, but regions such as Kenya, Nigeria, and South Africa are leading the pack as their respective fintech ecosystems continue to grow.

As the prevalence of leveraging blockchain technology to solve real-world problems grows across the continent, two use cases are becoming heavily adopted: Cryptocurrency Exchanges & DeFi Lending.

Africa's Secondary Cryptocurrency Markets

Cryptocurrency adoption in Africa has been growing rapidly in recent years, driven by everyday necessity and the need for financial inclusion. According to a report by blockchain data firm Chainalysis, Sub-Saharan Africa has the highest proportion of cryptocurrency retail payments under $1,000, accounting for 80% of such transactions globally. The region also has the highest volume of peer-to-peer transactions, making up around 6% of all crypto transaction volume.

The use of cryptocurrencies in Africa is driven by retail transactions, remittances, and commercial transactions. Retail-sized transactions below $10,000 make up 6.4% of the region’s transaction volume, with small retail transfers under $1,000 accounting for 80% of the share. Many young people in Sub-Saharan Africa turn to cryptocurrency as a way to preserve and build wealth in the face of low economic opportunity. The volatility of local fiat currencies, such as the Nigerian naira, also drives the need for cryptocurrency in the region.

Read more on Africa's cryptocurrency market trends here.

Africa's DeFi Lending Market

Based on data aggregated by RWA.xyz , there have been nearly USD $180 million in African-originated loans leveraging blockchain technology. The vast majority of these loans are going to medium-sized enterprises in Kenya and Nigeria. DeFi (i.e., "Decentralized Finance") lending allows for crowdsourced debt investment into private market loans, increasing the liquidity, market depth, transparency, and instrument flexibility in the global bond market (and, arguably, the world's real world asset markets more generally).

Not surprisingly, the regions with higher DeFi-debt origination also have more advanced regulatory frameworks for ensuring Web3 compliance. However, there has yet to be any African nation that has instituted laws regarding the legality / compliance needs of DeFi protocols specifically.

Web3 Investment Opportunities

As we approach the launch of the Umoja protocol, we are thrilled to present an unprecedented $45 million in Micro, Small, and Medium Enterprise (MSME) debt financing opportunities. Sourced from thriving markets in Tanzania, Nigeria, and Kenya, these investments are open to both institutional and retail investors. With an average yield exceeding 10% APY, each loan contributes directly to alleviating the formidable $330 billion financing gap burdening African MSMEs.

By tokenizing African MSME debt and Real-World Assets (RWAs), we are unlocking a realm of international investment opportunities. This innovative approach allows a global network of investors to:

1. Engage with the vibrant African market, with no minimum investment requirement.
2. Participate fractionally in private deals, gaining exposure to thoroughly vetted, high-quality opportunities. This also opens up secondary market liquidity, offering increased flexibility.
3. Experience returns of 2x to 4x higher than traditional high-yield savings accounts, contributing significantly to your wealth growth.

Join us in this exciting venture by becoming an Umoja Labs partner. Whether you're a retail or institutional investor, your participation can significantly impact the African economic landscape. Please complete our partner form here to get started. For more insights into our upcoming investment opportunities, visit this link. Together, we can drive financial inclusion and foster economic growth on the African continent.

The State of Web3 Regulation

Umoja Labs has generated several new reports on the state of #cryptocurrency adoption & #Web3 regulation over the past week. Click on the report links below to learn more.

1. State of Crypto: Nigeria. There are an estimated 12.86 million cryptocurrency owners in Nigeria, representing approximately 5.75% of the country’s populations. On Umoja Lab’s BRAF (Blockchain Regulatory Assessment Framework), Nigeria is rated a 48.25 out of 100, indicating that it is a “Developing Regulatory Environment” that is becoming more clear on where blockchain technology and cryptocurrency sit with regards to expected compliance measures.
2. State of Crypto: Kenya. There are an estimated 2.7 million to 4 million cryptocurrency owners in Kenya, representing approximately 5% to 9% of the country’s populations. On Umoja Lab’s BRAF (Blockchain Regulatory Assessment Framework), Kenya is rated a 40.63 out of 100, indicating that it is a “Developing Regulatory Environment” that is becoming more clear on where blockchain technology and cryptocurrency sit with regards to expected compliance measures.
3. State of Crypto: South Africa. There are an estimated 6.04 million cryptocurrency owners in South Africa, representing approximately 10% of the country’s populations. On Umoja Lab’s BRAF (Blockchain Regulatory Assessment Framework), South Africa is rated a 54.33 out of 100, indicating that it is a “Developing Regulatory Environment” that is becoming more clear on where blockchain technology and cryptocurrency sit with regards to expected compliance measures.
4. State of Crypto: Egypt. There are an estimated 3.32 million cryptocurrency owners in Egypt, representing approximately 3% of the country’s populations. On Umoja Lab’s BRAF (Blockchain Regulatory Assessment Framework), Nigeria is rated a 28.50 out of 100, indicating that it is a “Nascent Regulatory Environment” that needs much more clarification as to the legality of cryptocurrency and how Web3 companies may remain compliant.

Additionally, Umoja Labs has just released our first #AfricanDeFi report where we analyze the potential of DeFi lending in Nigeria and forecast its legality based on existing lending laws in the country.