Bitcoin’s potential to succeed in Africa is widely recognized within the industry.
It’s capable of transforming the way we send remittances to the continent and giving the unbanked easy access to money quickly and freely. It’s an alternative currency for anyone, but especially useful in countries with unstable national currencies, and can reduce the cost of cross-border trade.
In Freetown, Sierra Leone, an ethical fashion accessories company called Bureh is taking the first step in creating a digital currency economy for sub-Saharan Africa by accepting bitcoin via payments processor BitPay. That its total bitcoin transactions have been few since it began offering them in December doesn’t faze co-founder Daniel Heyman. Money movement, he told CoinDesk, is the main opportunity in bitcoin – not consumption.
Evidence of bitcoin’s transformative possibilities may be traceable across the continent. South Africa and Kenya certainly have well-established bitcoin economies that continue to progress. But so far, nothing on their level exists in West Africa.
Heyman said that stability and peace across the western region is at an all time high, and that makes prospects rosier for Bureh’s business and its possible role in the bitcoin ecosystem. He said:
“I personally am a big believer in the potential of bitcoin to leapfrog the existing financial infrastructure across sub-Saharan Africa. I’m not sure how quickly this will happen but in five years per se I could see a world where everyone has a bitcoin account tied to a cell phone, even in northern Sierra Leone where our fabrics are made. I could place orders from New York – which I do already – and also make payments.”
Business operations
Bureh launched in 2011. Its accessories are hand-produced in Sierra Leone by well-paid local artisans, said Heyman, and made from traditional fabrics sourced by local businessmen and entrepreneurs. The collection is distributed in Sierra Leone, the US, Europe and China, where it showed this April at Shanghai Fashion Week exhibition. The company, Heyman said, reinvests half of its profits into start-up companies in West Africa to promote entrepreneurship.
Heyman, who oversees his company from New York, said that the business is less susceptible to foreign exchange risk than most. “But our people, our employees, and our contractors are not,” he continued.
When the Sierra Leonean Leone (SLL) weakens against the dollar, Bureh as a business isn’t at risk, as its revenue is mostly in foreign currency, he explained, but that means everyone supplying services to the company suffers.
He said:
“BitPesa in Kenya is an example of the sort of service we would love in West Africa. If we could send money straight to our management team and even employees in Sierra Leone – with lower costs and fewer delays – that would really improve our responsiveness and our ability to manage complex organizations.”
Bureh pays fixed fees when it wires money from the US, said Heyman, but Sierra Leone banks automatically convert US$ into SLL. No specific figures were provided in this interview.
“This is where the majority of the fees are hidden,” he said, “and it’s hard to say exactly how much. Unlicensed exchangers offer rates that are regularly five to 8% better.”
Looking to Kenya
BitPesa, the bitcoin remittance service, and mobile money transfer service M-Pesa, are valuable because they eliminate the risk and uncertainty of fees, conversion rates, speed and fraud.
The global remittances industry is now worth over $500bn a year. In 2012, remittances to Africa alone were estimated at around $60bn.
Heyman said that West Africa has a long way to go if it’s going to catch up to Kenya in mobile banking, but that progress is rising throughout the region.
He added:
“I’m not sure Bureh will ever be a major player in the bitcoin space, but at this point we are big believers in its potential to make it easier to conduct business across borders and in places with underdeveloped banking systems.”
Image via Bureh