Dotting the roadside in what is widely considered Africa's largest urban slum are typical stands selling vegetables. Around 200 people use bitcoin in Soweto West, a neighborhood of the Kibera slum in Kenya's capital. It's part of an initiative to extend financial services to one of the country's poorest and most under-banked areas, reports the AP. Its promoters say the adoption of crypto fits with the ideals of bitcoin as an accessible, democratic technology—but experts say it also has major risks. Bitcoin came to Soweto West via AfriBit Africa, a Kenyan fintech company, through its nonprofit initiative to improve financial inclusion.
"In many cases, people in Kibera do not have an opportunity to secure their lives with normal savings," said AfriBit Africa co-founder Ronnie Mdawida. With bitcoin, "they do not need documentation to have a bank account … that gives them the foundation for financial freedom." AfriBit Africa introduced bitcoin into Soweto West in early 2022 through crypto-denominated grants to local garbage collectors. The groups are made up of dozens of young people, who Mdawida says are more likely to be open to new tech. After gathering on a Sunday to collect trash, garbage collectors are paid a few dollars' worth of bitcoin. AfriBit Africa estimates that it has put some $10,000 into the community, with garbage collectors acting as the main agents of spreading bitcoin in Soweto West.
Damiano Magak, 23, a garbage collector and food seller, said he prefers bitcoin to M-PESA, the ubiquitous mobile money platform in Kenya, because M-PESA transaction costs are higher and the network can be slower. Some merchants have found benefits to accepting crypto, including Dotea Anyim. She said around 10% of customers at her vegetable stand pay in bitcoin. "I like it because it is cheap and fast and doesn't have any transaction costs," she says.
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The possibility that crypto prices could keep rising also appeals to residents of Soweto West. Magak and Many said they now have around 70% to 80% of their net worth in bitcoin, a far higher level of exposure than most people. That concerns Ali Hussein Kassim, a fintech entrepreneur and chair of the FinTech Alliance in Kenya. "In an extremely volatile asset like bitcoin, it's overexposure," Kassim said. "You are exposing a vulnerable community to an ecosystem ... they can't necessarily afford to play in."
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