In the 2024 budget review, the South African government outlines some ambitious proposals and pilot projects to drive the digitisation of payments, with particular reference to enabling digital payments for the benefit of SMEs and informal traders. A lot of work will be required to achieve many of these digitisation objectives, but the intention itself presents tremendous opportunities that the cryptocurrency industry is perfectly positioned to help realise.

With practical interventions planned around community digitisation, cross-border remittances, facilitating informal trade, and more, crypto assets like Bitcoin and stablecoins provide ideal payment rails to facilitate and promote meaningful financial inclusion, not just in South Africa, but across the continent.

For too long, significant segments of the African population have been underserved and excluded from traditional financial services and the economic empowerment they facilitate for individuals, families and communities. The permissionless and decentralised nature of cryptocurrencies makes them the ideal solution to this lingering financial exclusion challenge because they can easily bypass legacy barriers and deliver financial access at a scale that has never been seen before on the continent.

The first pilot project outlined in the budget review is aimed at enabling digital payments for merchants in townships and rural areas and is a prime use case for unleashing crypto's potential. Stablecoins pegged to the South African rand could allow these small businesses in cash-heavy economies to cheaply and instantly accept digital payments from customers using just a mobile phone, without requiring expensive point-of-sale hardware or bank accounts tied to the formal financial system.

Imagine a street vendor in a small rural town being able to display a QR code that customers could seamlessly scan and pay with mobile crypto wallets funded by rand stablecoins. The money would reach the merchant's wallet instantly, and they would lose virtually none of its value to the untenably high transaction fees currently associated with many traditional POS transactions. They could then instantly use that digital cash to pay suppliers, purchase more stock, or settle other bills, without the risk of having to handle any physical cash. This is financial empowerment and economic integration - which is why we encourage the regulatory authorities to continue exploring their thought processes on this topic to ensure South Africa remains with the rest of the world.

When it comes to addressing the high costs of cross-border remittances, which is another area highlighted in the budget's proposals, cryptocurrencies offer a globalised, decentralised payments solution that cuts out inefficient intermediaries and outdated infrastructure. Foreign workers from neighbouring African countries could seamlessly and securely send money to family members back home, at a fraction of current remittance costs, many of which typically eat up a significant percentage of the value of the money being transferred.

Cryptocurrencies are also ideally suited to facilitating the low-value informal trade within Africa that the fourth pilot project outlined in the budget review aims to support. Traders could receive payments from buyers directly to encrypted digital wallets and access those liquid funds instantly, rather than having to wait days for banks to clear deposits into their accounts. This level of immediate access to funds is a game changer for any small or informal business, many of which face ongoing struggles with cash flow, which often results in business closure or the need to turn to risky and expensive sources of temporary funding, like loan sharks.

However, for crypto to truly unlock this transformative promise at scale across Africa, several factors need to fall into place. The first of these, which is already well underway, is clear and enabling regulations supported by robust policies to combat money laundering and illicit activities. Stakeholders in the country’s crypto industry are ready and willing to collaborate with forward-thinking policymakers to help craft balanced rules that enable the blockchain innovation required to unlock all these powerful cryptocurrency-based payment digitisation use cases.

Education will also be of paramount importance to drive widespread understanding, trust and adoption of cryptocurrencies by customers and merchants alike. A concerted and collaborative effort by the public and private sectors is required, with a focus on showcasing working examples of how integrated cryptocurrency payments translate to more affordable fees, faster settlement times, greater price transparency, and enhanced security over current payment methods. Only then will consumers and businesses be ready to fully embrace crypto as their digital payment of choice.

Ultimately, the government’s recognition of the urgent need to modernise SA’s financial infrastructure, promote inclusion, reduce costs and drive economic opportunity through digital payments innovation is an opportunity to make South Africa a global leader in realising the revolutionary promise of blockchain-based financial services tailored to the needs of emerging economies. But we need to act immediately, decisively, and collaboratively to take advantage of this opportunity and realise the vision of an inclusive, prosperous, and decentralised future of payments in Africa.