Fri. Dec 31st, 2021
    Blockchain, Kenya

    Interest in digital currencies is skyrocketing in Africa, especially in Kenya. Fintech companies in Kenya are embracing blockchain technology to help improve their services. This article explores the situation in Kenya regarding blockchain and crypto adoption.

    Kenya leads in financial technologies in Sub-Saharan Africa and outperforms other giants like Nigeria and South Africa. The nation has consistently developed innovative products internationally to improve financial inclusion, such as M-Pesa (mobile money). This is a mobile phone cash payment, micro-financing, and transfer service, which currently is among the most innovative products worldwide.

    In Africa, Kenya is the leading nation in terms of blockchain-related transactions and cryptocurrency holdings. According to a report by Citibank, Kenya is estimated to hold Bitcoin worth more than $1.62 billion (approximately KES. 163 billion). This indicates Kenya’s high appetite for cryptocurrency.

    Although cryptocurrency trading hasn’t been declared illegal, regulators like the Central Bank of Kenya (CBK) have publicly announced their pessimism and issued a public warning against investing in digital/virtual currencies. However, blockchain technology is being embraced in Kenya to solve problems, for instance, in farming.

    Uses of Blockchain Technology and Cryptocurrencies in Kenya

    Peer to Peer Trading

    Kenyans are aggressively trading cryptocurrencies through peer-to-peer (P2P) transactions more than any other country in the world. According to a Global Crypto adoption Index 2021 report by Chainalysis, Kenya is ranked 1st globally in terms of P2P exchange trade. The main reason is to mitigate the risks of weakening currencies and cushion cross-border businesses and remittances from high transfer fees across Africa.

    Payment Instruments

    Cryptocurrencies, powered by blockchain technology, are gaining traction in Kenya as payment instruments. Some businesses in Kenya, such as Healthland Spa in Nairobi, accept payments in the form of cryptocurrencies to prevent theft. Speaking at a recent World Bank event, Dr. Patrick Njoroge, Kenya’s Central Bank governor, mentioned that crypto and DeFi have emerged because individuals are losing trust in governments.

    The promoters of DeFi sought to leverage on the loss of trust in governments and financial institutions…. This saw the emergence of cryptocurrencies, headlined by bitcoin, positioned as alternative payment instruments.
    Dr. Patrick Njoroge, Governor, Central Bank of Kenya

    Additionally, some farmers in Kilifi are using Sarafu, a cryptocurrency in Kenya, to sell their produce and buy supplies without utilizing any cash, thus helping them save money.

    Easy Loan Access

    Blockchain technology is being implemented by tech conglomerates and start-ups in Kenya to solve problems. Small scale retailers are using mobile phone applications to access loans and improve their creditworthiness, an aspect many Kenyan banks have failed to solve. One example is IBM’s platform offered by Twiga Foods Limited, which is a mobile blockchain-based platform. Through such blockchain-enabled applications, Kenya’s informal sector has grown to a tune of about $20 billion.

    Key Blockchain Events/Projects in Kenya

    Recently, in August 2021, Kenya signed a deal with Singapore to strengthen the use of technology to snowball businesses. For instance, small-scale farmers will get livestock financing using FarmTrek blockchain technology through Lofte Kesho Kenya Limited.

    The Central Bank of Kenya, in February 2021, announced its plans to use bitcoin as a reserve currency to resolve its growing financial problems. The plans were arrived at after considering various factors like an increase in money velocity and foreign currency reserves shortage. Besides, this will also safeguard Kenya from exploitative loans that can mutilate its sovereignty.

    In July 2019, a report was published through Kenya’s Ministry of Information, Communications, and Technology, titled Emerging Digital Technologies for Kenya,’ exploring and analyzing the adoption of blockchain technology in Kenya. The report outlines the artificial intelligence and distributed ledgers technology task force, a critical indication of adopting blockchain technology in Kenya.

    Legislative Regulations of Blockchain and Cryptocurrencies in Kenya

    In Kenya, there are no particular laws regulating blockchain and cryptocurrencies. The Kenyan government is not receptive, nor does it ban the use of cryptocurrencies or the adoption of blockchain. Through its Central Bank, in December 2015, Kenya issued a public statement cautioning Kenyans against the use of virtual currencies.

    The Central Bank of Kenya is using a relaxed approach in terms of regulating cryptocurrencies and blockchain. In October 2020, Kenya’s Central Bank governor mentioned that the nation was holding discussions with international players regarding different ways around the establishment of Central Bank virtual/digital currencies, especially on matters concerning anti-money laundering (AML) and know-your-client (KYC).

    Currently, cryptocurrencies are not regulated in Kenya nor supported by the country’s Central Bank or the government. However, recent developments insinuate that cryptocurrencies might soon be controlled and treated as securities and not currencies. A taskforce has been formed to foster the adoption of blockchain technology through the Ministry of Information, Communications, and Technology.

    The Future of Blockchain Technology in Kenya

    The future of blockchain technology in Kenya looks promising, especially now that neighboring countries like Tanzania have legalized blockchain and cryptocurrencies. Through the established taskforce, Kenya’s Ministry of Information, Communications, and Technology is working tirelessly to achieve success in this matter.

    Already, there are various recommendations concerning the critical areas that blockchain technology can be utilized to help improve services. Some areas include eliminating corruption, lowering national debt via digital assets frameworks, enhancing elections and democracy, facilitating financial inclusion, reducing the cost of transactions, enhancing agriculture and food security, and improving the delivery of public services. Also, in accelerating the country’s big four agenda (affordable housing, food security, affordable universal health care, and manufacturing, focusing on job creation) geared towards Kenya’s Vision 2030.


    Even as the use of blockchain and cryptocurrencies in Kenya is rising daily, there is a lot of market excitement regarding the same, which has led to debates regarding regulation risks based on its characteristics, such as limited supply and borderless transactions.