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Rising Bitcoin Adoption in Nairobi’s Kibera Slum
A financial inclusion initiative by the fintech startup AfriBit is fostering the adoption of Bitcoin among residents in one of Nairobi’s most impoverished areas, primarily comprising local garbage collectors. The program has successfully engaged around 200 individuals from the Soweto West neighbourhood of Kibera, showcasing how cryptocurrency can provide financial services to those excluded from traditional banking systems.
Overview of the Program
Launched over three years ago, AfriBit’s initiative began by offering cryptocurrency grants as payment for rubbish collection services. This approach has gradually facilitated the wider acceptance of Bitcoin among local residents, with some merchants and taxi services now accepting it as payment. Although the program targets a small audience in the larger context of Kibera’s estimated population of 250,000 to 1 million, it sheds light on the potential for cryptocurrencies to empower the unbanked and underbanked populations.
Co-founder of AfriBit Africa, Ronnie Mdawida, expressed that for many residents, traditional banking services are inaccessible, which Bitcoin helps to rectify. Mdawida noted, “In many cases, people in Kibera do not have an opportunity to secure their lives with normal savings,” indicating that Bitcoin offers a crucial pathway to financial security and independence.
Residents’ Preferences and Experiences
Many participants have indicated a preference for Bitcoin over cash and the popular mobile money service, M-PESA, primarily due to its perceived safety, quick transactions, and lower fees. AfriBit’s utilisation of the Lightning Network allows users to conduct Bitcoin transactions without incurring additional costs, thus bolstering its appeal.
Local produce seller Dotea Anyim mentioned that about 10% of her customers now opt to pay with Bitcoin because of the transaction’s efficiency, commenting, “I like it because it is cheap and fast and doesn’t have any transaction costs… I save that money and use cash to restock vegetables.”
Challenges and Risks of Holding Bitcoin
However, the move towards Bitcoin is not without challenges. Residents must have access to mobile phones, electricity, and the internet to participate fully in this digital ecosystem. Additionally, many users perceive Bitcoin more as a speculative investment rather than a currency to be spent on day-to-day essentials.
Some programme participants have chosen to hold onto their Bitcoin, hoping to benefit from price increases, with reports suggesting that a significant number now allocate 70% to 80% of their net worth to cryptocurrency. This concentration raises concerns about financial vulnerability, as highlighted by Ali Hussein Kassim, chair of the FinTech Alliance in Kenya. He noted the dangers of such overexposure: “In an extremely volatile asset like Bitcoin, it’s overexposure. I can’t afford to lose 80% of my wealth. How about a guy in Kibera?”
Balancing Opportunities and Vulnerabilities
Kassim further elaborated on the risks associated with providing financial services to a community ill-equipped to navigate the volatile landscape of cryptocurrency. He underscored that while the advantages of cheaper cross-border payments may be enticing, their relevance to local residents in Soweto West is minimal given their current socio-economic context.
Nevertheless, one participant expressed enthusiasm for engaging with Bitcoin’s price movements, stating, “On my phone, I put notifications on when Bitcoin rises… it’s all smiles.” Such insights reveal a shared sentiment among crypto enthusiasts, regardless of their geographical location.
Conclusion
As Bitcoin continues to gain traction in the Soweto West area of Kibera, the initiative by AfriBit offers a glimpse into the potential role cryptocurrencies can play in enhancing financial inclusion in underserved communities. Nonetheless, the steep learning curve and financial risks associated with such speculative assets highlight the need for comprehensive financial education and support systems to ensure that residents can safely benefit from this evolving landscape, rather than succumb to its inherent volatility.
As this narrative unfolds, it serves as a reminder of the complexities surrounding the adoption of cryptocurrency in regions where financial stability is still a distant goal.
