MEETING OF THE JOINT

COMMITTEE OF THE ECOWAS

PARLIAMENT

PROSPECTS OF CRYPTOCURRENCIES AS
FACILITATOR FOR INVESTMENT IN
WEST AFRICA

Ouagadougou, Wednesday, 7 July 2021

 THE VARIOUS WAYS OF INVESTING IN
1 CRYPTOCURRENCIES

2 ADVANTAGES OF CRYPTOCURRENCIES

3 CRYPTOCURRENCIES AND PORTFOLIO

PERFORMANCE

4 CHALLENGES AND PROSPECTS

2
 INTRODUCTION
In high inflation African countries,
cryptocurrencies are mostly considered a means
of preserving the value of one’s savings.

In more stable regions, from a monetary point of

view, they are viewed as a tool for speculation
and enrichment.

There are three ways to invest in

cryptocurrencies
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1- THE VARIOUS WAYS TO INVEST IN
CRYPTOCURRENCIES

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1.1. Trading

 Cryptocurrencies are likened to other currencies

(dollar, euro, etc)

 Speculation: buying and selling of

cryptocurrencies in exchange of normal
currencies to benefit from exchange rate
fluctuations (law of supply and demand on the
market)

 In Africa, trading is the most common way of

investing in cryptocurrencies
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1.2. Mining
Possibility of being remunerated through “mining”
 Complex calculations are required to operate these
currencies in order to ensure security (cryptography)
and to update the blockchain when there are new
transactions.
 Companies and even individuals can register their
computers or servers, install adequate software on
them in order to participate in the calculations and to
receive a remuneration.
 Mostly, these are not significant incomes when the
expenses incurred (hardware, electricity) are factored
in.
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1.3. ICO (Initial Coin Offering)
The advent of cryptocurrencies offers start-ups the
opportunity to raise funds through ICOs

 Issuance of “Tokens” which are sold to the public (as

shares).

 Then, one can buy or sell these tokens with the

expectation that their value will increase when the
project (the setting up of the company) is rolled out.

 These tokens can also be used to purchase services

from the company at the end of the project.
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2 ADVANTAGES OF
CRYPTOCURRENCIES

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2.1. Advantages of cryptocurrencies
Transfer charges are lower than those of
classical banks and fund transfer companies
1. (like Paypal, Western Union)

Transfers are faster, within seconds or

minutes as compared to bank transfers
2. (hours or days)

Transfers can be done globally irrespective of

the country, and there is no maximum or
3. minimum amount of transfer.

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2.2. Advantages of cryptocurrencies (Cont.)

There is no intermediary (bank,

4. agent): the receiver’s addressed is
directly credited
Transactions are irreversible: the
5. transaction to the receiver cannot be
cancelled
Any individual or company can
6. transfer money.
7. Participating in the promotion of
financial inclusion
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3- CRYPTOCURRENCIES AND PORTFOLIO
PERFORMANCE

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3. Cryptocurrencies and portfolio performance

 The inherent Volatility of cryptocurrencies

increases portfolio risk.

 However, “this additional risk is offset by the

higher profitability ratios as compared to risk-
free investments such as portfolios invested in
gold or bonds”.

 Beyond this risk premium, cryptocurrencies

serve as hedge against shares and other assets
4 - CHALLENGES AND PROSPECTS

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4. Challenges and prospects of facilitating investment
To achieve trade
development
- Accreditation of companies
that accept payments in
4. Regulation
cryptocurrencies
1. Technological Regulatory
development uncertainty and high
The digitalisation of the risk level greatly
economy could pave inhibit development
the way for a more Challenges
reactive and productive in
fintech than the catalysing
bureaucratic financial investmen
services of today.
t
3. Accessibility to
the public
2. Financial education
Increase in the
Mass training and number of
sensitisation accredited
 CONCLUSION

 Cryptocurrencies provide
tremendous opportunity to
investors.

 However, there are real dangers.

 Caution is needed.
THANK YOU FOR YOUR
KIND ATTENTION

UEMOA Commission, 380, Av du Professor, Joseph KI-ZERBO, 01 BP 543 Ouagadougou OA, Burkina Faso
www.uemoa.int, commission@uemoa.int

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