How Facebook’s Libra is going to disrupt Africa
10 reasons why it is going to scale faster than Bitcoin
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For a number of years now news to do with Bitcoin, blockchain and cryptocurrencies in Africa have been greeted by widespread fears and scepticism. This has been perpetuated by the possibilities that virtual currencies can be manipulated towards crime, tax evasion and money laundering.
However, as more information is beginning to filter through African communities as well as the availability of testimonial enlightenment being administered by those who dared to try cryptocurrencies to their peers, more people are increasingly embracing cryptocurrencies.
The continued collapse and institutional abuse of weak fiat currencies in a number of countries have also assisted the rise of blockchain-based currencies as people are trying to preserve the value of their wealth and earnings.
According to the whitepaper issued by the newly formed Facebook subsidiary company — Calibra — which is responsible for the Libra coin, 1.7 billion adults globally remain outside of the financial system with no access to a traditional bank. This is despite the fact that one billion have a mobile phone and nearly half a billion have internet access.
Now it is important to note that the majority of this unbanked population is resident in the African continent with the World Bank estimating that Sub-Saharan Africa has around 350 million unbanked adults which accounts for 17 per cent of the global total, according to this 2014 report.
why such a huge number of Africans are unbanked
The reasons why such a huge number of Africans are unbanked has been linked to low incomes that people earn in that region of the world, given that most banks charge exorbitant fees for their services most people find living without a bank account an easier way.
This is compounded by the prevalence of high unemployment rates in most African countries leaving the informal means of employment as the most viable avenue for most people to earn a living — — and the informal sector is a cash zone.
Lack of trust in financial institutions cannot also be ignored as part of the reason why some people shy away from financial services and this is more common in countries such as Zimbabwe where there is a history of bank failures and currency devaluations.
And of course, in some African countries people shy away from financial institutions that are not in line with their religious beliefs, this is prevalent in countries with almost exclusively Muslim populations such as Niger where existing financial products are not compatible with the principles of Islamic finance.
Why Libra coin
Facebook seems to have been studying towards answering the, how to serve the unbanked world population question, as Libra coin is leaned towards serving the ‘forgotten ones’ — remember when Mark Zuckerberg made a surprise visit to Nairobi to learn about mobile money? — they seem to have done their homework thoroughly this time.
Information on hand paints Libra coin as a viable vehicle that is going to ensure that digital banking services reach the unbanked parts of the world. Not only Africa but all developing countries are set to benefit.
Take a country like India for example, it desperately needs such a service mainly in terms of remittances — given that nearly 200 million people use WhatsApp. The Asian country’s market for diaspora remittances is one of the biggest in the world, with the World Bank estimating that about 80 million United States dollars were remitted to the country in 2018 alone.
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