Analyst Corner

Again, Crypto Adopted as Legal Tender.

On the 27th of April, the Central Africa Republic (CAR) signed a bill to adopt Bitcoin as a legal tender alongside the CFA franc. CAR will be the second country after El Salvador and the first and only African country to legalise cryptocurrency for now.

Cryptocurrency has gained global popularity and usage in this past decade, although government and regulating agencies are still sceptical about its safety. Many countries including China and Qatar have absolutely banned all forms of cryptocurrency, 4 African countries including Algeria, Egypt, Morocco, and Tunisia have banned all forms of cryptocurrency trading, while 42 other countries have levied other forms of prohibition including Nigeria, Cameroon, and Gabon. However, the prohibition doesn't mean citizens in these countries are not exchanging cryptocurrency, matter of fact, the Geography of Cryptocurrency report 2021 reported that Africa's crypto market grew by 1200% between 2020 and 2021 with Kenya, Nigeria, Togo, South Africa, Ghana and Tanzania among the top 20 occupying fifth, sixth, ninth, sixteenth, seventeenth, and nineteenth position respectively.

Is this a good development?

Though the development seems great and interesting for the Central Africa Republic (CAR) there has been scepticism as to whether CAR was ready for such development, for reasons including:

1. CAR has one of the lowest internet penetration among African communities.

2. CAR is one of the poorest countries in the region.

3. In CAR only about 48% of its population have access to mobile connection. The question is how do they intend to trade cryptocurrency? Which means there'd be a large number of its population excluded.

4. CAR is one of the most troubled countries in the region, the adoption of cryptocurrency means the CAR central bank will lose control of financial transactions via cryptocurrency and this may encourage Money laundering, Tax evasion, Terrorist financing and Fraud altogether.

What should have been done?

The CAR should have adopted a digital currency which as opposed to the cryptocurrency will allow its central bank to exert some control over financial transactions.

Top headlines for the week

USA’s GDP Dropped in Q1:2022

While the most conservative analyst expectation was a 1.0% growth in Q1:2022, Gross Domestic Products (GDP) statistic released last week showed that the American economy contracted by 1.4% YoY. The decline in the GDP was a result of the drop in fixed capital investments, defence expenditure, and a substantial imbalance in trade. While the Federal Reserve plans to embark on a series of interest rate hikes which further poses a risk to GDP by discouraging capital investments, the GDP contraction is reckoned to be a temporary situation which is not likely to persist into subsequent quarters. This optimism is particularly premised on the expected improvement in net trade and defence spending. Specifically, the substantial trade imbalance resulting from businesses restocking inventory, which counteracted the rise in consumer spending in the period, is not expected to persist.

Elon Musk Finally Buys Twitter

Arguably, the widest known news in recent times is the move by Elon Musk, the CEO of Tesla, to buy the microblogging social media, Twitter. During the week, Twitter’s board members finally approved Musk’s USD44bn offer to buy the social media giant and take it private. Recall that earlier, Twitter’s board members introduced a poison pill to deter Musk from going ahead with the deal. However, following the board’s approval, the purchase by Elon Musk will be financed through a combination of cash, bank loans, and margin loans against Musk’s shareholdings in Tesla.

CAR Becomes First African Country to Adopt Cryptocurrency

Following a unanimous vote by the country’s lawmakers and the subsequent presidential assent last week, the Central African Republic becomes the first African country to adopt bitcoin as a legal tender. Globally, the country is the second country to make the controversial move, after El Salvador. The cryptocurrency would be used side-by-side with the CFA Franc in exchange for goods and services in the African country. This decision was taken in a bid to solve current challenges in the country.

 

Did you know

Although it seems unbelievable that in the 1960s, Zambia was in the race for the first to get to the moon. Zambia had a space program which was not successful. Edward Makuka Nkoloso, a science teacher and the self-appointed director of Zambia’s unofficial National Academy of Science, Space Research and Philosophy was the driver of the space mission in Zambia. 16-year-old Matha Mwamba was chosen as the first person to attempt a mission to Mars. Nkoloso reportedly sought funding from countries and organizations but he received nothing back except good wishes.

Box Office banger

Fun Size (known as Half Pint in some countries) is a 2012 American teen comedy film directed by Josh Schwartz and written by Max Werner. Fun Size was released in theatres on October 26, 2012, by Paramount Pictures and grossed $11 million against its $14 million budget. Though it doesn't always hit the hilarity target, this tween-targeted romp strikes a sweet-but-not-sappy balance. The fun to be had in Fun Size... is neither gigantic nor minuscule; it's just about fun-size, which is probably enough.

 

Quote of the week

“Rest is not idleness, and to lie sometimes on the grass under trees on a summer's day, listening to the murmur of the water, or watching the clouds float across the sky, is by no means a waste of time.” - John Lubbock