South Africa’s annual budget has revealed the government’s plans to advance digital payments in the country. The treasury aims to analyze stablecoins and blockchain technology to benefit marginalized groups and improve their livelihoods. The budget review for 2024 emphasized the need for structural reforms and improvements in public financial management. As part of its efforts to promote digital payments, the treasury announced an upcoming policy change specifically focused on stablecoins. The Intergovernmental Fintech Working Group will include stablecoins as a distinct type of crypto asset in its publications.
The working group previously published a crypto regulation paper in June 2021, and it will now amend it to encompass stablecoins and conduct a comprehensive assessment of the local stablecoin landscape. The objective is to better understand the potential use cases of stablecoins and develop suitable policy and regulatory responses. There are considerations to amend the Financial Intelligence Centre (FIC) Act, which would require all institutions to report crypto transactions exceeding 49,999 South African rand ($2,650).
South Africa also plans to investigate the impact of blockchain-based tokenization on its domestic financial markets. The working group aims to publish a paper by December 2024, outlining the policy and regulatory implications of tokenization and blockchain-based financial market infrastructure. The South African government will collaborate with Switzerland’s State Secretariat for Economic Affairs and FinMark Trust on a three-year program. This program will oversee four pilot projects focused on digital payments, including community digitalization, digitizing payments for informal and low-income workers, cross-border remittances, and cross-border trade. The main goal of these initiatives is to support small and informal businesses by fostering payment innovation.
South Africa has seen success in utilizing digital disruption to benefit remote populations, as demonstrated by the experiences of East African farmers. Blockchain technology has helped these farmers access global markets, opening up new opportunities for growth. An example of this is the partnership between AgTech firm Dimitra and One Million Avocados (OMA), a sustainability-focused tech group, which was announced on July 20, 2023. This partnership aims to assist Kenyan avocado farmers in improving production and quality by leveraging cutting-edge technologies such as blockchain.
South Africa is determined to promote the adoption of digital payments and explore the potential benefits of stablecoins and blockchain technology. By implementing policy and regulatory changes, conducting research, and running pilot projects, the government aims to enhance financial management, support marginalized groups, and boost the economy through payment innovation.
South Africa’s commitment to community digitalization and digitizing payments for low-income workers will create more inclusive financial opportunities. An inspiring initiative!
I highly doubt these pilot projects will actually benefit small and informal businesses. It’s all talk. 🙄
South Africa’s commitment to payment innovation and digital disruption is a promising sign for the country’s economic growth. Exciting times lie ahead!