Source: Benjamin Dada

Introduction

According to a report by MyGovIndia, in 2022, India topped the list of countries with the highest number of digital transactions. With over 89.5 billion digital payments carried out in the country that year, there’s no doubt that India is at the forefront of payment technology.

Over the years, India has been on a mission to broaden its payment system to other countries to further enhance cross-border payments. It’s in this regard that the country is looking to expand its United Payments Interface (UPI) to Africa and is reported to currently be in talks with Namibia, Kenya and Mozambique governments.

What is India’s United Payments Interface (UPI)?

In 2016, the National Payments Corporation of India (NPCI), the regulatory body that oversees digital payments in the country, launched the UPI. It was launched as a payments network to give Indians a way to seamlessly carry out online transactions. Built as a mobile system that enables easy transactions between various integrated bank accounts, UPI has seen a significant increase in the number of transactions. In July 2023, over 10 billion transactions were done, according to data published by the NPCI. There are currently over 470+ banks live on UPI.

The payments network has gained global attention over the years and many countries have already adopted it. South Korea, the United Kingdom, Singapore, Australia, France, Hong Kong, and Malaysia are just a few of the growing countries that have embraced the UPI.

Source: India Briefing

Indians can make payments to these countries via the UPI. Among the countries in the current list, one thing is glaring - no African country can be found. (P.S _ I’m open to corrections). Well, all of that is about to change as India is eyeing Africa as the next region to introduce its UPI services to.

India extending its UPI to Africa:

Like I stated earlier, India is looking to introduce UPI to developing African countries and beyond to encourage instant and secure transactions across the continent and the globe at large. This was made public during the recently concluded BRICS summit which took place last month in Johannesburg, South Africa.

Source: News18

India aims to promote financial inclusivity and boost economic growth and it believes that UPI integration is a good way to make this happen. Currently, India is already making moves and discussing the possibility of this with the governments of Namibia, Kenya, Mozambique along with other member countries of BRICS. If successful, this could be a solution to Africa’s financial payment challenges.

What could this mean for blockchain in Africa?

When it comes to Africa, cross-border payment has always presented an issue. From freelancers receiving payments for services rendered to international clients to people sending money to their family & friends who reside abroad, payments have had its hurdles. It comes with no surprise that Nigeria, an African country, ranked among the list of top 10 countries globally in terms of crypto adoption in 2021. This is in line with the statistical data shared by UNCTAD and as seen in Emurgo Africa’s “State of Web3.0 in Africa” report released this year.

Source: UNCTAD

Africans need financial sovereignty and transparency, hence, they turn to decentralized financial systems. However, in truth, the majority of people in the continent are yet to fully accept cryptocurrency as a means of payment or even understand the tech behind it and one of the reasons for this is trust.

Now imagine a trusted payments network like UPI (after being fully embraced by African countries) integrating decentralized payment tech like blockchain into its system. You’ll agree with me that they’ll be a formidable pair and an answered prayer for Africa’s dying financial payment landscape.

Let’s explore what a possibility of this could mean for the blockchain sector in Africa.

Seamless cross-border transactions: if the emergence of UPI protocols in Africa is backed with blockchain tech, Africans can kiss slow & costly payment methods goodbye as cross-border transactions will be easier to carry out via digital payment systems (under which crypto falls).

Adoption of blockchain technology: when Africans experience the ease with which they can carry out payments with UPI, they’ll slowly begin to wonder how faster and easier it will be to use blockchain-based payment solutions. Curiosity might then lead to interest and interest to action.

Growth of digital infrastructure in Africa: according to African Development Bank Group, “there is great disparity in digital infrastructure investment across Africa’s urban and rural areas,” as only a tiny percent of rural areas can boast of digital connectivity. Some even question if Africa can truly achieve digital independence especially in an era like this - an era of “Big Tech.” India’s extension of its UPI services to Africa might just be what the continent needs to further improve its poor digital infrastructure. Improvements in this area could result in positive contributions that’ll aid Africans’ participation in blockchain tech.

Possible support from African governments: the above-listed benefits of UPI’s expansion to Africa, in regards to blockchain, only recognize the citizens usage notwithstanding the governments’ approval or disapproval. But this extension could possibly lead to the governments of various African countries picking interest in blockchain.

If the UPI succeeds in Africa, some governments may be prompted to take a closer look at blockchain tech to see how it could fit into the economy’s growth. This could lead to further developments of blockchain projects in African countries which is already the case, but this time around, with support from the government.

I’m no stranger to how governments have criticized blockchain tech (crypto usage in particular) over the years, but I’m also convinced of the possibility of this happening. A proof of this is the Sango Project which is fully backed by the Central African Republic (CAR) government.

Statistical insights:

Africa isn’t new to the idea of fintech. Infact, as stated in a recent report by Boston Consulting Group (BCG) and QED Consulting, Africa is one of the regions with the highest revenue gotten from fintech. The revenue from the African fintech market is predicted to reach $230 billion by 2025, according to an analysis by McKinsey & Company.

Source: McKinsey

In the above image, blockchain is predicted to contribute to 50% of the revenue, even though blockchain, technically, isn't a fintech. This further proves that blockchain can be a great stimulator for economic growth in Africa and the plan to embrace India’s UPI could be a huge stepping stone towards this growth.

Conclusion

As the need for better payment solutions for Africans arises, there’s this realization that blockchain ticks most of the boxes. Hopefully, UPI’s push to Africa will encourage more participation in digital payment frameworks and, in turn, foster Africa's trust in blockchain technology. Ultimately, for this to happen, certain factors will need to be properly considered and measures put in place.

As always, I'd love to hear your thoughts on this. This topic is open for meaningful discussions!