A market is said to be international when it involves cross-border transactions. This means that the transfer of goods, services, and payment happens across countries. The era of the digital economy makes this an even more common occurrence.
In Africa, cross-border transactions are an important part of the economy. However, regulatory bottlenecks seem to pose a sort of stumbling block for cross-border transactions.
Despite these, the market continues to find ways to thrive. In an attempt to solve the issues, the African Continental Free Trade Area (AfCFTA) was established by the African Union to simplify cross-border transactions, reduce trade barriers and promote economic growth within the continent.
There are also fintech solutions that are working to improve cross-border transactions by deploying mobile payment gateways and other digital platforms.
While all of these are improving the situation, there is still more work to be done. Digital assets are a great addition to these solutions.
Digital assets refer to things that have value but exist only in digital form and can be traded on online platforms. Their value usually comes from authenticity, utility, and scarcity.
These digital assets can come in the form of digital currencies, digital files, or digital artworks.
Leveraging these digital assets for cross-border transactions in Africa will go a long way towards
helping overcome the challenges that are faced using traditional means for cross-border transactions.
One of the ways digital assets come in handy is through cryptocurrencies, it can be used to conduct seamless cross-border transactions, eliminating intermediaries, thereby making transactions faster and cheaper.
This means that no matter the countries involved in the cross-border transaction, there is no need to go through the process of changing currency.
Also, transactions are concluded in minutes unlike wire transfers or other payment methods that can take days to get to the receiving end.
Another way digital assets can help cross-border transactions in Africa is through improved transparency.
The digital assets are traded on platforms operated on blockchain technology and this ensures that the record of every transaction is stored properly and can be easily traced.
The decentralized nature of blockchain technology has another benefit, it means that no single entity or organization gets to control it.
This lowers barriers and restrictions that are common with single-entity controlled portals, thereby promoting financial freedom within acceptable thresholds.
Additionally, leveraging digital assets for cross-border transactions will increase accessibility as
mobile penetration is increasing in Africa by leaps.
This means more people have the opportunity to tap into it and conduct cross-border transactions as long as they have an internet connection no matter their location within the continent.
There are several positive impacts of leveraging digital assets for cross-border transactions in
It can boost international trade through its faster, and cheaper transaction rates which in turn leads to increased economic growth in the continent.
Increased job creation is another impact, with access to new markets, demand will increase and more people will be needed to supply the needs of the demand. Increased financial inclusion is another impact.
In conclusion, the use of digital assets will drive other notable innovations that would be useful
for cross-border transactions in Africa.
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