The Central African Republic adopts bitcoin as legal tender

The Central African Republic, the second least developed country in the world according to the UN, has adopted bitcoin as its official currency alongside the CFA franc and legalized the use of cryptocurrencies, the presidency announced on Wednesday, ensuring that it is the first country to do so in Africa.

The National Assembly voted "unanimously" by the deputies present the law "governing cryptocurrency in the Central African Republic" and President Faustin Archange Touadéra has promulgated it, assures in a press release the Minister of State and Chief of Staff of the Presidency, Obed Namsio , adding: the Central African Republic is "the first country in Africa to adopt bitcoin as a reference currency" .

On September 7, 2021, El Salvador was the first country in the world to adopt bitcoin as legal tender and the International Monetary Fund (IMF) immediately denounced a decision dangerous for "financial stability, financial integrity and consumer protection. " .

"This approach places the Central African Republic on the map of the most courageous and visionary countries in the world" , considers on the contrary the presidency of the Central African Republic, a country in civil war since 2013. At the end of 2020, a majority of the armed groups which then occupied two thirds of the territory launched an offensive against the power of President Touadéra, who called on Moscow for help.

Russian paramilitaries

Already present since 2018, Russian paramilitaries came as reinforcements alongside Central African soldiers to repel the rebel offensive. But the UN, international NGOs and France, the former colonial power, regularly denounce "crimes" committed by "mercenaries" from the Russian private security company Wagner , as by the rebellion. And accuse the power of Faustin Archange Touadéra of having put the country under the control of Wagner, affirming that the latter "loots" the resources of the country, in particular in precious minerals.

“The context, with systemic corruption and a Russian partner under international sanctions, incites suspicion ,” said Thierry Vircoulon , a specialist in Central Africa at the French Institute for International Relations (IFRI). "Russia's search for ways around international financial sanctions calls for caution ," he continued.

"The law was passed by acclamation" , according to the presidency, but some members of the opposition "will attack the law before the Constitutional Court" , declared Wednesday to AFP Martin Ziguélé , former Prime Minister now deputy of the opposition.

Volatility

"This law is a way to get out of the CFA Franc by a means that empties the common currency of its substance , it is not a priority for the country, this approach questions: who benefits from the crime?" , he continued.

"The purpose of this law is to govern all transactions related to cryptocurrencies in the Central African Republic, without restriction  carried out by natural or legal persons, public or private" , prescribes the text which refers in particular to "trade activities online" , "all electronic transactions" or even "tax contributions" . The law also provides that "cryptocurrency exchanges are not subject to tax" .

The volatility of bitcoin can make you dizzy. In 2021, prices had soared by more than 150% to a historic high of 68,991 dollars, before collapsing by more than 30%. Even if the market calmed down in 2022, the variations remain very strong: -17% in February, +8% in March and +10% in April. Bitcoin was trading Wednesday at over $39,000.

Legal currency

For the time being, only El Salvador and the Central African Republic have adopted bitcoin as legal tender , but other countries are considering doing so, some having initiated legislative processes in this direction, according to the specialized site Coinmarketcap.com .

In Ukraine, the government accepted cryptocurrency donations , raising more than $100 million in the early days of the conflict to fuel its war effort.

But Western central banks are also worried about their possible use to circumvent the sanctions imposed on Russia and calls for international regulation are increasing in the United States and Europe .

In addition, around the world, many countries are talking about the possibility of creating their own digital currency , which would be centralized. 

Senegal reduces trader taxes on imports

The conflict between Russia and Ukraine has dealt a severe blow to the global food supply chain. The interruption of exports of certain foods such as sunflower oil or wheat handicap countries in the Middle East and Africa which are highly dependent on these foodstuffs.

This is particularly the case for Senegal, where 60% of the wheat in 2021 came from Ukraine and Russia.

The recent scarcity of imports is pushing traders to raise prices.

A consequence that the Senegalese government wishes to counter by implementing solutions.

Among them, increasing subsidies and reducing taxes and fees.

"Wheat prices have been at a high level over the past period due to higher freight rates amid the Covid-19 pandemic. In response to higher wheat prices, we have also taken steps to alleviate the difficulties of the mills. We were all hoping to see prices go down, but unfortunately wheat prices have started to soar again due to the outbreak of the conflict between Russia and Ukraine." said _Momar Ndao, president of the Consumers Association of Senegal.

Last month, the president of the Consumers' Association of Senegal urged Senegalese to report to authorities any vendors overcharging certain products.