Two months after adopting bitcoin as an official currency, the Central African Republic (CAR) has officially launched Sango Coin, a controversial cryptocurrency, and announced plans to launch Africa’s first zero-tax crypto-hub.
“Sango will be the new generation currency of the Central African Republic,” said President Faustin-Archange Touadéra during a virtual government event held on 3 July.
It is not clear how Sango Coin will work alongside the country’s official adoption of bitcoin, which was announced in May, a move which attracted widespread scepticism from experts given that internet adoption in the country – one of the poorest in the world – is only around 10%.
But according to Touadéra, Sango Coin will allow the country to exploit its untapped natural resources by facilitating investment through decentralised platforms and avoid the restrictions of the international financial system. Touadera also claimed that cryptocurrency will solve structural problems that prevent people from accessing basic financial services. The president stated that 52% do not have access a bank account.
“The smartphone is the alternative to traditional banking, cash and financial bureaucracy,” he said.
‘Crypto Island’
Touadéra says that the new tax-free crypto hub will be “the catalyst for the tokenisation of vast natural resources”, attracting crypto-rich investors around the world to invest in the CAR’s untapped minerals.
The project will also involve the launch of “Crypto Island”. This platform is intended to be a metaverse platform that will allow virtual palaces, casinos and large stadiums to be built. Real property in Bangui, the capital of the CAR, will also be used.
The CAR was the first African country to accept bitcoin as legal currency earlier this year. It also became the second-most popular country in the world after El Salvador, raising concern among international institutions.
The IMF said that CAR’s adoption of bitcoin as an official currency “raises major legal, transparency, and economic policy challenges”.
The Bank of Central African States (BEAC), whose role is to enforce monetary policies in the six-member Central African Economic and Monetary Community, said that the CAR’s move on cryptocurrency is a threat to the stability of its common currency and prohibited its use within the bloc.
But Touadaré believes Sango – named after the official language of the CAR – is an opportunity to free the country from binding rules of financial institutions, and tap the potential of the informal economy.
“The cash alternative is cryptocurrency. For us, a formal economy is no longer an option,” he said.
People of CAR ‘will not see many improvements’
However, experts fear that the CAR’s enthusiasm for bitcoin could be a smokescreen for dubious economic activities. The BEAC expressed concern about the possibility that cryptocurrencies could make money laundering easier for criminals.
The construction of a “crypto island”, says David Gerard, an independent technology journalist, is likely to resemble “special economic zones, where whoever the richest people are make the laws.”
“If this scheme is going forward, outside people will take control of the resources, make all the money, and the people of CAR will not see many improvements, except for the ones at the top,” says Gerard.
“Technology is not involved. It’s all about the financial instrument and business deals. It is all about people and the flow of cash. Technology does not do magic, and certainly does not make the money flow differently,” he says.
Some have speculated that Russia’s close interests in the CAR – which include the government-approved deployment of the Wagner Group of military contractors – could be served by the adoption of cryptocurrencies.
“Russia has been trying to extend its influence in Africa a lot and wants African countries to back its position on Ukraine and it would pay people to do that,” says Gerard.
Source: african.business