Binance adds Nigerian naira support, and plans for even more currencies
On average, sending a $200 remittance from South Africa costs 17.78%.
As of now, Binance users in Nigeria can purchase Bitcoin, Binance Coin and BUSD (Binance's USD stablecoin) with Nigerian naira through the exchange, courtesy of a new partnership with Flutterwave.
"Africa has illustrated one of the largest demands and instrumental use cases for cryptocurrency, notably for financial access, in the world’s second-largest continent," said Binance CEO Changpeng "CZ" Zhao. "In Sub-Saharan Africa, about 95 million people remain unbanked while many regions in the area, including Nigeria, have embraced new technologies with an increasing amount of innovation."
"Working with Flutterwave will help bridge the fiat-to-cryptocurrency gap and we hope to stimulate more financial inclusion as Africa demonstrates strong potential in leading crypto adoption."
Previously, Binance added support for the Ugandan shilling, and going forward it expects to add new fiat currency support for more local currencies such as the Kenyan shilling and the South African rand. Elsewhere, it's brought on the Russian rouble and quietly added the British pound and the euro to its API.
Remittances are big business everywhere in the world, but they're especially big compared to other capital inflows in emerging economies, and they're especially expensive.
For example, if you're wondering why Binance is keen to add the South African rand, just take a look at this chart:
As of 2017, sending $200 from South Africa cost an exorbitant average of 17.78%. Although the World Bank notes that money transfer costs from anywhere fall considerably when savvy senders shop around for the best deal first.
The red line in the table above just indicates the G20 average. The global average is much higher, with remittance costs along many African corridors being among the world's highest and trending above 10%, according to the World Bank. The same report also notes a higher-than-most rate of remittance growth in Africa.
Remittance costs are one very good reason for Binance to introduce fiat corridors around Africa. Comparatively unstable currencies and a profound lack of banking infrastructure are others.
The fact that Binance Charity has been engaging with local communities across parts of Sub-Saharan Africa and normalising the use of cryptocurrency, wallets and crypto exchanges wherever it goes, is another good reason, while the borderless DeFi ecosystem emerging online is yet another.
A lack of banking infrastructure and extensive de-risking has cut off a lot of people off from the global financial system. This in turn is contributing to factors like ultra-high remittance costs, which further drives the desirability of alternatives like cryptocurrency.
"What we do at Flutterwave is create possibilities for the everyday African to become prosperous," said Flutterwave co-founder and CEO Olugbenga "GB" Agboola. "We create opportunities for the everyday African to reach prosperity levels that were beyond them in the past. That's what this partnership is about. Africans are firmly part of the global financial community."
Disclosure: The author holds BNB, BTC at the time of writing.