The Central African Republic (CAR) has become the second country in the world to adopt Bitcoin as legal tender, following on from El Salvador in September last year.
Despite being rich in mineral wealth, CAR is one of the world’s poorest countries and has suffered from decades of conflict.
According to DataReportal, CAR has the lowest internet penetration rates of any country in the world – excluding North Korea – at just 7.1%. As such, the incentives behind adopting a currency that requires an internet connection are not immediately obvious.
Lawmakers unanimously supported the bill that brings Bitcoin into contest with the French-backed CFA Franc.
After President Faustin-Archange Touadéra signed the bill into law on April 27, his chief of staff, Obed Namsio, declared: “This move places the Central African Republic on the map of the world’s boldest and most visionary countries.”
The International Monetary Fund (IMF), which in January warned El Salvador of the “large risks associated with the use of Bitcoin on financial stability, financial integrity, and consumer protection”, has also voiced concerns over the Central African Republic’s decision.
IMF Africa department director Abebe Aemro, speaking on Sub-Saharan African economies, said: “It’s really important to not see such things as a panacea for economic challenges our countries face.
“You have to make sure that the legislative framework, in terms of the transparency of financial flows, the governance framework around it is all robustly in place.”
Some in the crypto and finance space see the move towards Bitcoin as an attempt to undermine the CFA Franc. Many citizens in the six African countries that still use it believe it is an outdated relic of the French colonial era.
“It’s a big middle finger to the French economic system,” Chris Maurice, CEO of African-focused crypto exchange Yellow Card, told Reuters.
What’s more, since coming to office in 2016, President Touadéra has been shifting the country’s ties away from France and towards Russia.
CAR was one of the few nations that abstained from a United Nations vote condemning Russia’s invasion of Ukraine, while Touadéra has been condemned for deploying mercenaries from Russia’s Wagner Group to fight rebel groups.
“The context, given the systemic corruption and a Russian partner facing international sanctions, does encourage suspicion,” analyst Thierry Vircoulon of the French Institute of International Relations, told the AFP news agency.
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