The Central African Republic has become the first African country to adopt Bitcoin as legal currency, and the second in the world after El Salvador. Yet, only a small part of its population has Internet access.
Lawmakers of the Central African Republic unanimously adopted a bill that made Bitcoin legal tender alongside the CFA franc. It also legalized mining and the use of cryptocurrencies, which all become legally convertible with CAR legal currencies.
President Faustin Archange Touadera signed the measure into law, his chief of staff Obed Namsio said in a statement on April 26. “This move places the Central African Republic on the map of the world’s boldest and most visionary countries,” according to the statement.
Many countries and the International Monetary Fund are on the contrary concerned by the use of cryptocurrency, its lack of control and transparency.
El Salvador last September became the first country in the world to adopt Bitcoin as legal currency, alongside the American dollar. El Salvador, despite the high volatility of the Bitcoin, said it would ensure an equivalence with the dollar. Bitcoin is not fluid for day-to-day transactions, and El Salvador created a digital wallet to facilitate them, similar to the mobile app that a Salvadoran touristic village was using, created with the help of a mysterious Californian financier.
An agency is created to regulate electronic transactions and manage ATMs, with no further details for the moment. Citizens will be able to pay taxes in Bitcoin. However, cryptocurrencies can also be used for tax evasion, laundering money or financing illegal activities. The statement mentions legislation against cybercriminality will be adopted at a later date.
CAR is one of the world’s poorest countries, currently entangled in a nine-year-old civil conflict. Authorities have recently been distancing themselves from France and Western countries to restore calm and got closer to Russia, which earlier this year eventually decided not to ban cryptocurrencies. Observers think they could be a way for Moscow to circumvent some of the financial sanctions imposed because of the war in Ukraine and have access to dollars. Russia dispatched paramilitaries to help CAR authorities repel rebels.
“This law is a way of getting out of the CFA franc through a means that guts the common currency,” said Martin Ziguele, a former CAR prime minister who is now an opposition parliamentarian. CFA Franc is an African regional currency backed by France and linked to the value of the euro. “This move raises the question: who benefits from it?,” Ziguele said.
In a country of 4.8 million people, only 10% of the population were Internet users in 2020 according to the International Telecommunication Union. Moreover, there are only 38 mobile-cellular subscriptions per 100 inhabitants, while mobile transactions are often a way to introduce a banking system and reduce financial exclusion in developing countries. If the statement mentions electronic transactions, it makes no mentions of measures facilitating day-to-day transactions.
Although Bitcoin may be legal tender in Central African Republic, it will then likely be used only to a fraction of the population.