HEATH MUCHENA: Bitcoin could be Africa’s secret weapon against inflation

Africa is no stranger to economic turbulence. Across the continent many nations have seen their currencies fall victim to the unforgiving tides of inflation and devaluation. Hard-earned savings lose value before they can be spent and economic independence often feels like an elusive dream. But what if there was a way to fight back? Enter bitcoin. 

While much of the world debates bitcoin as an investment or speculates on its volatile price swings, African nations might find a more profound use for it as a treasury asset. This isn’t about crypto hype; it’s about practical economics. Bitcoin’s unique properties — scarcity, decentralisation and deflationary design — offer a chance for African nations to stabilise their economies, hedge against inflation and even lead the way in global financial innovation. 

In Ghana, the cedi lost more than 50% of its value against the dollar in 2022. In Zimbabwe, hyperinflation once reached 89.7-sextillion percent. Even in more stable economies such as Nigeria the naira’s consistent depreciation eats away at purchasing power and savings. 

This is the reality for millions across the continent. Inflation erodes the value of local currencies faster than people can save or governments can act. Traditional solutions, such as holding reserves in foreign currencies, or gold, help to a degree but aren’t immune to global market fluctuations or geopolitical risks. 

Bitcoin offers an alternative. Unlike fiat currencies, which governments can print at will, bitcoin’s supply is capped at 21-million coins. Its scarcity is hard-wired into its code, making it immune to the inflationary pressures that plague traditional currencies. 

Moreover, bitcoin operates independently of central banks or governments. This decentralisation means it’s not subject to the whims of global financial politics — an advantage for nations seeking monetary sovereignty. 

Bitcoin is also highly liquid. Nations can convert it into fiat currencies or other assets almost instantly, providing flexibility for managing reserves and addressing immediate fiscal needs. And while its price is undoubtedly volatile, its long-term trend has been one of appreciation, making it a powerful tool for preserving wealth over time. 

How it could work 

Here’s the idea: African nations allocate a small percentage of their national reserves to bitcoin. This isn’t about replacing gold or the dollar overnight, but diversifying reserves to include an asset that grows in value over time. 

For example, Ghana could dedicate just 2% of its annual gold export revenue (about $10bn) to purchasing bitcoin. By dollar-cost averaging — buying small amounts regularly — the country could mitigate the risk of price volatility while steadily building its bitcoin reserves. 

Governments could also channel part of their sovereign wealth funds into bitcoin, creating a digital complement to their resource-based assets. Proceeds from oil, cocoa or other exports could be converted into bitcoin, turning the continent’s rich natural resources into a hedge against inflation and devaluation. 

Why this matters for Africa 

Bitcoin isn’t tied to any one economy or political system. During global uncertainty or local instability it acts as a financial lifeboat. By holding bitcoin, African nations could signal their embrace of financial innovation, attracting investment from the global crypto community. Think of the potential for blockchain start-ups, fintech hubs and crypto-based foreign direct investment. 

Bitcoin’s scarcity and long-term appreciation could create intergenerational wealth for African nations, reducing reliance on volatile commodities or foreign aid. Early adopters could set the tone for financial innovation across Africa, creating frameworks for others to follow. Imagine an African bitcoin alliance, pooling resources to build regional strength and negotiating power. 

Sceptics will rightly point to bitcoin’s volatility — it can swing dramatically in value. But this is where smart strategies come into play. By keeping bitcoin as a small percentage of reserves and balancing it with stable assets such as gold, nations can manage risk effectively. 

Regulatory concerns are another hurdle. Governments must develop clear frameworks to integrate bitcoin into their financial systems while ensuring transparency and security. Partnering with experienced custodians and leveraging multisignature wallets can help safeguard these digital assets. 

The status quo isn’t working. Inflation continues to erode wealth and dependency on foreign currencies leaves African economies vulnerable to external shocks. Bitcoin offers a way to break free — a modern tool to complement traditional resources and strategies. 

This isn’t just about financial pragmatism; it’s about taking control of the narrative. African nations have the opportunity to lead the way, showing the world how emerging economies can embrace innovation to build stronger, more resilient futures. 

The future of African prosperity might just be written on the blockchain. 

• Muchena is founder of Proudly Associated and author of ‘Artificial Intelligence Applied’ and ‘Tokenized Trillions’.