By Judicael Yongo and Tom Wilson and Rachel Savage
BANGUI (Reuters) – The Central African Republic’s adoption of bitcoin, as many of the world’s biggest economies remain wary of the virtual currency, has intrigued the cryptocurrency world and residents of the gold and diamond-producing country, and sparked a call for caution by the International Monetary Fund (IMF).
Using bitcoin to buy and sell goods and services depends on reliable and fast internet and widespread access to computers or smartphones.
But the Central African Republic has internet penetration rates of just 11%, or about 550,000 people online in 2021, estimates website DataReportal. Meanwhile, only about 14% of people have access to electricity and less than half have a cell phone connection, says the Economist Intelligence Unit.
Cryptocurrency analysts and experts said major challenges lie ahead in adopting bitcoin in one of the world’s poorest countries, with low internet usage, widespread conflict, erratic electricity and a population unfamiliar with digital currencies.
The Central African Republic provided few details in yesterday’s announcement on how it plans to address these challenges. The government did not respond to Reuters requests for comment.
The statement said the move made the Central African Republic one of the “most visionary countries” in the world, but residents of the capital Bangui, where most are familiar with cash, were stunned.
“Bitcoin. What is this?!” said Auguste Agou, who runs a logging company in Bangui.
The African country of 4.8 million people is the second in the world to turn to bitcoin, after El Salvador, which adopted bitcoin as its currency in June. But its commercial use was thwarted by internet glitches.
Blockchain researcher Chainalysis, which tracks digital currency usage, had no data on the violence-ridden Central African Republic that is home to Russian mercenaries who help the government overcome rebels.
Some said that by adopting bitcoin, the Central African Republic sends a message about the Central African CFA franc, the regional currency used by six countries governed by the Bank of Central African States (BEAC) and pegged to the euro.
BEAC must, through the currency union, hold at least 50% of foreign assets with the French Treasury, an arrangement that has been criticized for slowing economic development.
“Central Africa is extremely behind in terms of development,” said Chris Maurice, president of cryptocurrency exchange company Yellow Card Financial.
“It’s a big middle finger for the French economic system.”
The IMF, which in January urged El Salvador to end its decision to make bitcoin legal tender, expressed caution about the Central African Republic’s decision.
“It’s really important not to see these things as a panacea for the economic challenges our countries face,” said IMF Africa Department Director Abebe Aemro Selassie.
