The Central African Republic's decision to adopt Bitcoin as legal tender came as a surprise to many, but the government argues that it will secure an independent financial future for the country, as the BBC's Damian Zane and Guy Bandolo report.
The president seemed to be following the Elon Musk
style of cryptic cryptocurrency tweets.
Under the teasing heading
"More to follow" CAR President Faustin-Archange
Touadéra typed "Vires in Numeris" - a Latin motto meaning
"strength in numbers" that has been associated with Bitcoin. Then
came his nation's motto.
This was shared with the world a month after the CAR
became only the second country, following El Salvador, to adopt Bitcoin as
legal tender.
The mineral-rich nation is ranked as one of the
poorest in the world - a situation complicated by a near-decade-long civil war
which has devastated much of the country. The government has recruited the
Russian mercenary Wagner group to help in its fight against rebels.
The CAR's Bitcoin announcement left many scratching
their heads and some wondering if it had more to do with a political shift away
from France and towards Russia.
There has certainly not been a sudden explosion in
the capital, Bangui, of businesses such as shops or cafes accepting Bitcoin as
a means of payment.
According to an estimate from 2020, nine out of 10
Central Africans do not have access to the internet - a prerequisite for using
Bitcoin.
That, along with a patchy and unreliable electricity
supply, led some to question whether the CAR was the right country to test the
theory that cryptocurrencies were set to replace traditional forms of money.
'Visionary plan'
The initial decision, announced on 27 April, was
accompanied by little explanation except that it would open up "new opportunities
for our country".
The "more to follow" that President
Touadéra was referring to in his May tweet was the announcement of a project
called Sango - named after one of the country's official languages.
This "visionary" plan would create "a
fantastic opportunity for anyone who believes in crypto investing",
according to a government press release.
To
go on an investor waiting list, the visitor is encouraged to sign up to receive
a "secret code".
The
code provides access to a flashy slide presentation that declares that the CAR
wants to build the "first legal Crypto Hub recognized by a country's
parliament, that welcomes businesses and attracts global
crypto-enthusiasts".
Sango
is a "Crypto Island… the first island in the metaverse that is backed by
reality".
The
people behind the presentation used a lot of "big words" but
"the document was not very clear on exactly what they want to do",
says Stone Atwine, a crypto-specialist who runs digital financial services
company Eversend.
Among
the jargon seems to be a plan to allow people to invest in mining and other
industries using Bitcoin and a promise that no income or corporation tax will
be charged.
Mr
Atwine believes that this could have potential as "a lot of cryptocurrency
enthusiasts are looking for great places to build where things are legal".
The
CAR has significant deposits of diamonds and gold, as well as other minerals,
and Bitcoin is being seen as an easier way to attract investors to the country.
"Impenetrable
bureaucracy keeps us stuck in systems that don't give us the ability to
perform. The solution was to rethink our economic philosophy," President
Touadéra said in reference to the Sango project.
The plan cannot be faulted for its ambition but when
it comes to cryptocurrency and ordinary Central Africans, more publicity - and
infrastructure - are clearly needed.
"I don't understand what cryptocurrency
is," Edith Yambogaze, who sells cassava in Bangui, told the BBC.
"I have a smartphone, but I do not have good
enough internet to be able to use cryptocurrency. Also, I do not trust
cryptocurrency because there are people who do scams on the internet."
This scepticism seems to be matched by some in El
Salvador, where President Nayib Bukele promotes Bitcoin with a missionary zeal.
"El Salvador has had problems with the take-up
of the Chivo Wallet," said Ganesh Viswanath-Natraj, an academic at Warwick
University specialising in cryptocurrencies.
The Chivo Wallet is a government-developed app to
make Bitcoin transactions easier, but recent research suggested that while
there were a lot of downloads when it was launched last year, there have been
virtually none in 2022.
Some people told researchers that they did not trust
Bitcoin.
'The internet is coming'
Backers of CAR's adoption of the cryptocurrency,
however, are asking people to be patient.
MP Jean Galvanis Ngassiyombo, who is on the National
Assembly's economic, planning and finance commission, admitted that the
technological infrastructure was not yet in place in the country.
But he told the BBC that a fibre optic network would
be installed by the end of next year which could give everyone internet access.
The CAR has signed a deal with neighbouring Cameroon to share its fibre optic
network in 2023.
"What the [Bitcoin] law did is anticipate that
technology so, in fact, we can be ready when that technology is available to
us," Mr Ngassiyombo said.
He is a cryptocurrency investor himself and told the
BBC how he gets regular updates about price fluctuations on his phone. "I
made money today," he laughed as he showed how the app works.
It is argued that in a country where few people have
bank accounts, the adoption of Bitcoin will help encourage savings and offer a
safe place to store and transfer money.
But many are sceptical.
Dr Viswanath-Natraj argues that while there are
advantages, investor concern about the country's financial stability could in
fact drive up interest rates and the volatility in the Bitcoin price could
damage savings.
The Cameroon-based Bank of Central African States
(BEAC) oversees the CAR's currency, the CFA franc, which is backed by France
and is shared by five other countries in the region. It was not happy when the
law was passed.
A damning letter sent in April from the bank's
governor, Abbas Mahamat Tolli, to CAR's Finance Minister Hervé Ndoba said the
Bitcoin law indicated that the country wanted to establish a currency that
could compete with or replace the CFA.
He urged CAR to scrap the law, saying it could
affect financial stability in the region.
The International Monetary Fund was also critical,
saying that it raised "major legal, transparency and economic policy
challenges", the financial news agency Bloomberg reported.
Supporters of Bitcoin, which is hailed as a
disruptive force that improves the lives of ordinary people, may not be
surprised by the attitude of established economic institutions.
But the criticism and where it is coming from also
indicates that the CAR's move may have political motives as well as economic
ones.
While France's involvement with the CFA and the fact
that it is pegged to the euro ensures its stability, critics also see it as a
form of neo-colonial control.
They argue that it stymies economic independence and
allows France, the former colonial power, to retain its influence.
The
Jeune Afrique journal has reported that some government ministers have a
strategy of trying to break away from France.
Despite
the fears of the BEAC, it is highly unlikely that the CAR would give up the CFA
"as this would cause major economic disruption", analyst Nathan Hayes
from the Economist Intelligence Unit told the BBC.
"It's
a populist announcement from the government, rather than a serious shift in
monetary policy," he said.
It
could also signal a move towards Russia.
After
President Touadéra came to office in 2016, the country started shifting its
strategic alliance from France.
As
part of this, mercenaries from the Russian Wagner Group have been used to help
fight rebel forces.
There
has been speculation that they are paid through the awarding of mining
contracts but Bitcoin "would be a way to circumvent any restrictions on
payments if they wanted to move away from this in the future", Mr Hayes
said.
But
for the MP Mr Ngassiyombo, the move towards cryptocurrency has nothing to do
with Russia.
"The
way we conduct our business… depends on what the president of this country is
trying to build for its own people."
And
if the glossy Sango presentation is to be believed, he wants to create "a
digital future of endless possibilities".
Source:BBC