Who Really Controls the Digital Foundation?

Africa’s crypto market has exploded, reaching $205 billion in value. While adoption is clear, less visible is who controls the underlying infrastructure that enables these transactions.

Nigeria Leads Inflows

Nigeria received a staggering $59 billion in crypto-asset inflows between July 2023 and June 2024, according to IMF data. This surge is linked to economic factors like currency depreciation and limited access to foreign exchange.

Stablecoins like Tether’s USDT and Circle’s USDC facilitate much of this activity. When you send a stablecoin from your phone in Lagos or Nairobi, several layers come into play:

  • The blockchain itself
  • Nodes that connect wallets to the network
  • Cloud servers hosting applications
  • The issuing company (Tether or Circle)

Most crypto apps don’t run their own nodes; instead, they rent access from providers like Alchemy, Infura, QuickNode, or Blockdaemon - a practice that centralizes some aspects of decentralized products.

Limited Node Presence

According to Ethernodes, Africa hosts only about 28 Ethereum execution-layer nodes out of roughly 8,000 globally (less than 1%). The distribution is uneven:

  • South Africa: 13 nodes
  • Mauritius: 9 nodes
  • Nigeria: 4 nodes (only one fully synced)
  • Others have fewer or none

This limited presence raises questions about resilience and control over a critical infrastructure component.

Stablecoin Issuers Expanding Locally

Tether is actively building distribution channels in Africa through investments like Kotani Pay in Kenya, which connects crypto users to local payment networks. These partnerships extend the reach of stablecoins while creating additional layers of complexity.

A recent study by Data Landscapers mapped 306 data centers across Sub-Saharan Africa:

  • 70% are African-controlled
  • 13% are US-controlled (primarily in South Africa, Nigeria, and Kenya)
  • Cloud providers like AWS and Azure operate in 53% of the African-controlled facilities

The study highlights a shift towards local ownership but also reveals dependence on global cloud infrastructure.

Can Firms Switch Providers Easily?

While Ethereum’s design allows for swapping node providers with minimal code changes, the flexibility for African crypto firms remains less documented. Factors like contractual obligations and liquidity dependencies could create switching costs.

As Africa’s digital economy matures, understanding this layered infrastructure - from cloud servers to stablecoin issuers - is crucial for policymakers, investors, and entrepreneurs alike.