Africans turn to crypto as charity funding dwindles

Fundraising via crypto, NFTs grows amid funding downturn

Advocates say crypto donations faster, easier to access

Challenges include internet, power access and gender gap

By Kagondu Njagi

NAIROBI, July 19 (Thomson Reuters Foundation) – A sculpture of a giant tap spewing plastic waste greeted delegates at U.N. environment talks in Kenya earlier this year – a reminder of the urgent need for them to agree a global pact to curb plastic pollution.

The 30-foot (nine-meter) tall sculpture was built from rubbish collected in Nairobi’s Kibera slum by artist and activist Benjamin Von Wong, who raised funds for the project by selling non-fungible tokens (NFTs), records of digital images bought with cryptocurrency.

Von Wong – with activist Casson Trenor and the Degenerate Trash Pandas, an NFT community that advocates against plastics with the Solana cryptocurrency – raised about $110,000 for the installation that also provided work to about 100 Kibera youth.

“Raising funds through cryptocurrency was something new for us,” said Byrones Khainga, director of technical services at Human Needs Project, a nonprofit in Kibera that helped on the installation.

“But it is now going to inform how we implement our social welfare activities because we have seen how fast we can move on fundraising,” said Khainga, whose nonprofit tackles problems in Kibera such as garbage disposal and access to drinking water.

The project is one of several examples of cryptocurrency and NFTs being used in African nations to fund welfare and development projects related to education, electricity, healthcare, housing and livelihoods.

Crypto fundraising has picked up as traditional channels of funding dried up in the wake of the coronavirus pandemic and because of economic slowdowns, said Roselyne Wanjiru, a researcher at Blockchain Association of Kenya, an industry body.

“Crypto reduces barriers of entry, and is a fast way of raising funds for social causes because it is easier to navigate than traditional financial systems,” said Wanjiru.

“We are seeing more companies and individuals use it to offer solutions to communities.”

A resident fetching water at the Human Needs Project facility in the Kibera slum in Nairobi, Kenya. May 20, 2022. THOMSON REUTERS FOUNDATION/Kagondu Njagi.

COSTLY BARRIER

Cryptocurrencies were designed to be free of central financial authorities such as governments and central banks. They allow for “peer-to-peer” transfers between users online without any intermediaries.

Their relative anonymity also offers a haven for criminals, extremist groups and sanctioned governments, but champions say they help support marginalised groups and those caught up in crises, even as a sharp downturn in values hurts many users.

Payments and remittances via crypto are rising in Kenya, Nigeria and South Africa, which have among the highest share of crypto ownership among nations globally, according to the United Nations’ trade agency UNCTAD.

About 8.5% of Kenya’s 56 million people own crypto, UNCTAD said, while the Central African Republic adopted bitcoin as an official currency in April.

Virtual coins that use the same underlying blockchain technology as cryptocurrency are also in use in Kenya, like sarafu – meaning currency in Kiswahili – which is issued by the nonprofit Grassroots Economics Foundation.

The community currency helps more than 50,000 poor residents who cannot access bank loans to pay for essentials such as food, healthcare and housing.

Also in Kenya, the Celo Foundation and Mercy Corps Ventures this year launched a microwork pilot, giving hundreds of youth access to digital jobs, and paying them with Celo dollars, a stablecoin that tracks the value of the U.S. dollar.

Microwork is a form of digital labour that breaks up big projects into hundreds of smaller tasks that can be completed on a mobile phone in minutes. In several African countries, more women than men are microworkers as they can work from home.

But paying workers on time is a challenge, with cross-border payments often slow and costly, with a high transaction fee.

With Celo dollars, workers can be paid immediately, with a much smaller fee. On completion of a task, the payment is transferred to their digital wallet, and they can cash out the Celo dollars on M-Pesa, Kenya’s popular mobile money platform.

Choreographer Big Mich shows her dance moves at Kibera slum in Nairobi, Kenya. February 17, 2022. THOMSON REUTERS FOUNDATION/Kagondu Njagi.

While stablecoins are seen as less risky than other cryptocurrencies, users can be affected by volatility if they hold on to them, rather than cash out immediately, experts say.

Cryptocurrencies can drive financial inclusion by creating new digital employment opportunities and reducing the cost of cross-border payments, said Scott Onder, senior managing director at Mercy Corps Ventures, the venture capital arm of global development agency, Mercy Corps.

“Cryptocurrency removes this costly barrier and has the potential to create new ways for young people to earn, spend, save and send money,” he said in a statement.

FILLING A GAP

Reliable access to electricity and the internet are among the challenges to using digital coins in Africa, and most users are still men, an imbalance that mimics the uneven access to traditional finance.

Kenyan choreographer Big Mich, who trains slum youth including girls on developing and marketing their dancing skills, aims to change that: she plans to sell her dance moves as NFTs, and use the funds to benefit poor communities.

“There are concerns that crypto mining is contributing to global warming because of the huge amount of energy it consumes. But we must not overlook the good things this technology can provide for us,” she said.

In Nairobi’s Kibera slum, the funds raised through the sale of NFTs are also helping create hundreds of permanent jobs, said Von Wong.

“NFT communities can be leveraged as a major force for good, filling a major gap in development efforts across the globe,” he said.

“Anything that helps make it easier to funnel capital more quickly and inexpensively to those in need is always a good thing.”

(Reporting by Kagondu Njagi; Editing by Rina Chandran and Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit https://news.trust.org)