The use of cryptocurrency in sub-Saharan Africa, particularly among its young people, cannot be overstated. Data from blockchain intelligence firm Chainalysis says the region's crypto usage grew 1,200% last year, making it the third-fastest growing cryptocurrency economy.
But despite the proliferation of local and foreign crypto exchanges and the introduction of novel models by up-and-coming web3 platforms, some observers believe there are still notable barriers to using crypto in Africa.
This reflection has led to new upstarts such as MARA, a pan-African crypto exchange platform that wants to "increase the number of Africans who can participate in the crypto economy." Today, the startup is announcing that it has completed a seed round of $23 million in equity and token sale from multiple investors. They include high-profile crypto and web3 investors such as Coinbase Ventures, Alameda Research (FTX) and Distributed Global.
Other VCs in the round include TQ Ventures, DIGITAL, Nexo, Huobi Ventures, Day One Ventures, Infinite Capital and DAO Jones (investment DAO backed by Mike Shinoda, Steve Aoki and Disclosure), while about 100 other crypto investors also participated.
“We are pleased to partner with MARA as it embarks on building a digital financial system for Sub-Saharan Africa,” says Schuster Tanger, co-founder of TQ Ventures, one of the investors, in a statement. “With the right resources, this region has potential for mass adoption of cryptocurrency. To that end, the local knowledge and specialized skills of the MARA team is quite promising."
MARA says it is building a suite of products that address various crypto-finance needs for the African audience. Its flagship product is a consumer crypto-brokerage app that allows users to buy, send, sell and withdraw fiat and crypto assets. The company is targeting an initial launch in July this year in Kenya and Nigeria, the two countries in which it is headquartered.
Though MARA claims that its users don't need any prior crypto knowledge before using this retail app, the fact is that local solutions such as this are aplenty in Africa, like Coinbase Ventures-backed VALR and Yellow Card. But what may make the web3 upstart stand out is its subsequent products.
In Q4 this year, it will launch the MARA Chain, a layer-1 blockchain and Alchemy-esque platform powered by the native MARA token for developers to build decentralized applications -- also known as dApps -- in Africa. Then sometime in Q1 2023, MARA intends to launch a pro-exchange for sophisticated traders that utilize technical analysis and prefer a full set of trading options to the traditional exchange options on MARA's retail app.
"What we're doing is we're creating financial infrastructure for people to build their lives. And so it's more than just being able to buy crypto; it's about African engineers creating their [own] projects. We want to be the source for incubating talent; we want to give them the platform through our exchange to launch their projects," said co-founder and CEO Chi Nnadi on MARA's unique selling proposition.
He founded the company in April 2021. The rest of the executive team includes Llinás Múnera, Dearg OBartuin, Kate Kallot and board advisors Kojo Annan and Tatiana Koffman. They are former executives from Amazon, PayPal, Uber, Nvidia, Founders Bank and Rappi.
Prior to MARA, Nnadi ran Sustainability International, a nonprofit organization that managed community-led solutions for solving UN Sustainable Development Goals. While shuttling between Nigeria (his home country) and the U.S., he became aware of the societal and financial challenges affecting Africans in remote places and theories of how bitcoin and blockchain technology could help.
"Instead of understanding blockchain technology specifically for its utility within the African context, there's an opportunity to use it as a foundational trade technology to make sure capital got to people's hands and last mile."
The Sustainability International team worked on a project with Consensys, which birthed the design of Sela Technologies. It was a platform that enabled direct payments and distributed accountability -- via smart contracts -- to stakeholders in a development project.
"We were involved in really bringing blockchain technology to the woman in the market and the last mile. And so it was working on that that I started to realize we needed wallets, an exchange and core infrastructure for crypto in Africa," Nnadi added, describing what led to the formation of his web3 startup.
Over the past year, a few web3 and decentralized platforms like Alameda Research-backed Nestcoin and Jambo (also Coinbase Ventures-backed) made their way into Africa with a promise of onboarding millions of users into a new economy -- and enriching them too. Although their impact is collectively yet to be noticed, with time, this may change.
But MARA wants to make an immediate influence. In a statement, the company revealed that it struck a partnership with the Central African Republic (CAR) -- the first country to legalize bitcoin as legal tender in Africa and second globally only to El Salvador -- to become its official crypto partner and an advisor to the president on crypto strategy and planning.
"We're there to advise the president on improving their technology infrastructure so that they can bring on widespread crypto adoption. So that means advising them to expand internet access and mobile phone adoption and working in an advisory capacity since they're the first African country to adopt bitcoin."
Nnadi argues that while there's strong grassroots adoption of crypto in most parts of the continent, it's happening without oversight. As a "legalized exchange," MARA plans to teach governments and provide support on KYC and AML best practices. The partnership with CAR brings that theory to actuality one of the first steps the web3 platform would try to embark on -- to help the government set up a national ID campaign and, after that, implement KYC/AML standards that will go side-by-side with crypto education and financial literacy.
"The government is working through multi-year multi-step processes that will allow them to address infrastructure issues. And then, once those infrastructure challenges have been addressed, it'll be quite easy for folks to use the Mara wallet," the chief executive remarked.
Nnadi says his company will engage more African governments -- including those that have an anti-crypto stance like Nigeria and Kenya -- to see the benefits of blockchain and assist in drafting licensing regimes for crypto companies to operate in their countries.
It's unclear how MARA intends to bring these governments, whose reputation of being strong-headed precedes them, to reason; but only time will tell what comes out of such dialogue. For now, the year-old company will be basking in raising arguably the largest round at this stage for an African crypto/web3 company. "We're fortunate to work with some of the top crypto companies on the planet and some of the top VCs as well," said Nnadi.