Ways Crypto Can Benefit SMEs In Africa
Here is how cryptocurrency might help African SMEs grow.
By Anna B Kiwanuka
SMEs (Small and Medium Enterprises) are rapidly expanding across Africa. According to a World Bank research, small and medium-sized enterprises account for over 90% of firms and more than 50% of employment worldwide, particularly among young people. As a result, they are recognized as Africa’s development engine.
In reality, due to rapid population increase, the public sector in African countries is unable to meet the daily demands of all citizens. In order to compensate for the shortcomings of the public sector, SMEs face a variety of obstacles, ranging from management to finance. Here are a few ways that cryptocurrency might help African SMEs meet their financial objectives.
- Financial transaction costs are decentralized and minimized.
Cryptocurrencies are advantageous for SMEs because of their decentralized nature, which allows users to manage their finances without any significant restrictions. Entrepreneurs’ chances of completely integrating into the commercial world are hampered by the old financial system, which is often restrictive and time-consuming.
For example, to obtain a bank loan, an entrepreneur must first open a bank account, for which the bank charges a yearly maintenance fee. Furthermore, the loans are sometimes obtained at exorbitant interest rates and such circumstances are detrimental to SME success. However, with cryptocurrency, there are no annual or monthly charges for account maintenance nor are interest rates included.
Additionally, decentralized finance is a method for financial inclusion that allows both banked and unbanked persons to access financial resources at lower costs.
- Cross-border transactions at a low cost
Unlike traditional banks, which charge fees on all transactions, cryptocurrency transactions are significantly less expensive. The cost of foreign transactions involving banks is significantly higher. As a result, SMEs with foreign partners frequently suffer significant losses anytime they conduct financial transactions. Using crypto transactions, on the other hand, SMEs are charged fewer transaction fees.
Crypto platforms such as Yellow Card’s Yellow Pay allow you to send money across national borders quickly, reliably, and securely with no restrictions on the amount of money you can send. This is advantageous to all African SMEs.
- Safer and more secure means of exchange
With cryptocurrency, it is difficult for anyone to easily access and steal your funds due to the encrypted nature of the coins. Hackers can indeed invade your personal information and steal your crypto but it is more complicated than it seems because that requires your private key.
To avoid being hacked, it is preferable to use a trusted crypto exchange service that has more secure platforms compared to peer-to-peer transactions. With this, SMEs can be confident that their funds or profits are safe and secure.
- Multiple payment options are available.
SMEs may operate on a local level, but they can use cryptocurrency to accelerate their growth. As a result, incorporating numerous payment options provides your organization with international significance early on, attracting plenty of new customers.
Accepting bitcoin as payment is an added benefit for SMEs in Africa, given the continent’s commercial potential in the crypto space.
- It’s a way of getting ready for the future.
With the possibility of cryptocurrencies overtaking the old financial system, it’s important to be prepared for the upcoming change.
Accepting cryptocurrencies brings value and influence to your business while also preparing you for future financial trends. Because of the significant growth observed in this domain between 2009 and now, most doubters in crypto are progressively being converted.
As bitcoin’s popularity grows and more users sign up, its value rises, and its users are better positioned to respond to changing consumer tastes.
Conclusively, as an entrepreneur, the time to start using cryptocurrencies to boost your business is now. Though cryptocurrencies are highly volatile in nature, the impact they could have on an SME’s growth is worth considering.
Note to SMEs: Start using crypto and have better control over your finances.