Jack Dorsey eyes African market

Dorsey ended his trip with a tweet from the Ethiopian capital of Addis Ababa stating that "Africa will define the future especially the bitcoin one!”

With that, the founder of Twitter and Square confirmed his intention to return to Africa for six months in 2020 — an announcement which sent stocks in his companies spinning as investors contemplated the effect of absent leadership, but also roused curiosity from Bitcoin fans second-guessing the purpose of his travels.

“I want to understand the challenges of starting a company here and figure out a way I can support,” said Dorsey at a town hall meeting in the Nigerian capital of Lagos at the beginning of his trip. “I want to live here for three to six months next year, full time, no travelling.”

A bitcoin missionary

On his expedition across the continent, Dorsey stopped at several tech hubs including the ‘silicon savannah’ of Kenya, and the thriving start-up scene of Ethiopia, where he listened to pitches from the companies driving change in the nascent tech sector.

One such pitch was from Dara Oladosu, the creator of a Twitter app called Quoted Replies, who was offered a job after meeting Dorsey in Lagos.

But the biggest area of transformation, as suggested by Dorsey’s tweet, is likely to be the payments industry. Lack of infrastructure across large swathes of Africa means a great chunk of the population remains unbanked, and funding is flowing into fintech solutions to remedy this, with mobile money services like Safaricom’s M-Pesa becoming popular.

But as corporations have taken control of money, problems have arisen, not only do private services like M-Pesa still use volatile local currencies, they are also vulnerable to network failure.

The leading transaction platform in Zimbabwe, EcoCash, suffered network outages in July this year, leaving businesses stranded without a payment option. Around the same time, Bitcoin trading skyrocketed as the local government banned the use of foreign currencies to settle transactions.

Search metrics in African countries also appear to show increased interest in bitcoin. The four countries Dorsey visited, Nigeria, Ghana, Ethiopia, and South Africa, are among the top ranking regions for searches for “Bitcoin” worldwide over the past year, as per data from Google Trends.

That Dorsey should be looking to plant the seeds of Bitcoin adoption in such a fertile region will come as no surprise, considering his enthusiasm for the cryptocurrency. He told The Sydney Morning Herald in September that he believed Bitcoin was still the "best bet" for becoming the internet’s native currency.

"As I look at all cryptocurrencies that could fill that role of being the native currency for the internet, [bitcoin is] a pretty high probability," said Dorsey, while conceding that more development was needed to address the "volatility and sluggish transaction processing."

Fertile ground for adoption

Square Crypto, the cryptocurrency-focused branch of Dorsey’s mobile payment company Square, is well-placed to assist with this development by building the digital infrastructure needed for Bitcoin adoption in the region.

Square’s Cash App was originally devised as an investment portal, but after customers started treating it more like a bank account, Dorsey made the decision to "lean into the trend" and expand the app to better serve users in underbanked areas of the US like Memphis, Detroit, and Saint Louis.

As senior equity analyst at MoffettNathanson Lisa Ellis told CNBC, this use case neatly dovetails with Africa’s untapped banking market:

“[Cash App] fits tightly with Square’s mission to empower the individual entrepreneur and drive financial inclusion. I can see products like Square’s merchant working capital, and the ability to purchase bitcoin and do fractional investing, having significant applicability in Africa.”

Meanwhile, Facebook’s embattled cryptocurrency project Libra, which once also set sights on the developing world, has slumped after hitting a global wall of resistance from regulators.

In November, the rival social media giant pivoted with the announcement of Facebook Pay — a new payment system for WhatsApp, Messenger, and Instagram that is less focused on helping the unbanked, and more on streamlining existing payments.