Is Cryptocurrency the Last, Best Hope for African Youth Entrepreneurs?

Jul 5, 2018 2:55 PM ET

As every successful entrepreneur can attest, nothing helps transform a great idea into a real product or service faster than access to adequate resources -- especially capital.

Yet, over 80% of African entrepreneurs still struggle today to get their businesses properly funded. Too many innovative ideas are strangled before they even get started. Grammy-nominated artist and philanthropist, Akon, hopes to solve this problem with AKoin, his new cryptocurrency.

AKoin cryptocurrency is the foundation of the AKoin Ecosystem, a ground-breaking platform that seeks to unlock the potential of the world's largest emerging economy through the creation of a stable currency and tools that power the efforts of the next generation of entrepreneurs. The ecosystem will engender innovative, revenue-generating opportunities that stimulate and support youth entrepreneurship, economic stability, and growth across Africa and the developing world.

This global project offers an abundance of digital and in-real-life experiences that create opportunity and inclusion for youth entrepreneurs. Consumers will be able to buy, hold, and spend cryptocurrency right from their smartphones through a suite of blockchain-powered apps. The exclusive suite of apps seeks to offer revenue-generating opportunities to stimulate micro-exchanges and financial stability, dramatically improving business opportunities for African youth entrepreneurs – and ultimately, the world -- by giving economic power back to the people.

Local currency instability, inflation, and a lack of banking services are at the heart of the African entrepreneur's dilemma. Ventures Africa reported that financing remains the biggest challenge new businesses face, ranked number one by 34% of African entrepreneurs in a 2015 study. The International Finance Corporation (IFC) estimates that up to 84% of small and medium-sized enterprises (SMEs) in Africa are either unserved or underserved, leaving a value gap in credit financing of $140 billion to $170 billion USD.

According to Reuters, most African countries rely on U.S. dollar debts to finance their economies because governments have not done enough to develop their capital markets. As local currencies drop lower and lower in value, their debt drastically increases. It is estimated that Africa’s external debt jumped to $443 billion USD by 2013, and since then, the dramatic devaluations in currencies have raised the cost of the servicing this ever-growing liability.

ICO Impact Group, a founding and strategic partner in AKoin, sees great potential for cryptocurrencies as tools to help protect people from government corruption and failing local currencies. When young people are given access to new technologies and tools to start and run their own businesses, local and regional economies improve -- not only in Africa, but, in the future, in other countries around the world facing similar development challenges.

“This new decentralized ecosystem is how businesses will get funded in developing countries,” said Ryan Scott, Chairman of ICO Impact Group. “This is how the next generation of innovators will connect with customers. This is how they will buy and sell goods and connect with services they desperately need. Ultimately, this is how they will pull themselves out of poverty and escape the corruption of their governments and financial institutions.”

In announcing the AKoin Ecosystem on June 18, 2018 from the stage at the Cannes Lions Festival, Akon opined, “I think that blockchain and crypto could be the savior for Africa in many ways because it brings the power back to the people and brings the security back into the currency system.”

This approach to individual and community wealth creation may indeed be one of the last, best hopes left to the young entrepreneur faced with impossible circumstances seeking to grow a business. That’s a notion not lost on the young innovators themselves, as evidenced by their adoption of interactive online marketplaces and alternative currencies, including cryptocurrencies, and their adoption continues to rapidly outpace other regions, including North America and Europe.