As of early next year, Facebook intends to launch it’s new cryptocurrency Libra. But what does this mean for Africa? Facebook has about two billion users, and about 100 million are in Africa. The introduction of Libra could bring major implications for other mobile cash payments that dominate Africa. Cryptocurrency is not well recognized here in Africa and Libra may disrupt cash remittance businesses like Money Gram and Western Union. There are innumerable factors responsible for maintaining efficient market hypothesis which corporations exploit to great effect. Furthermore, most African governments have come to terms with relying on remittance kind of revenue. Most African countries have prohibited the use of cryptocurrencies including Zimbabwe, which is well on its way to being a cashless society thanks to the growing adoption of mobile money services. This is why African leaders need to address with Facebook because the impact of Libra will be so dire.
Facebook’s Libra white paper, which outlines the tech giant’s plans to re-imagine global finance, does show that unlike completely decentralized digital currencies such as Bitcoin, which operate outside the oversight of central authorities or banks, Libra is set to be backed by a reserve of actual currencies and assets. Facebook is using this difference to convince policy-makers that Libra is a bankable bet. It has the high-powered backing of the likes of Visa, MasterCard, Uber, Spotify and even South Africa’s PayU. With the help of the pan-African mobile telephone operator Airtel Africa, Facebook rolled out Free Basics in no less than 17 African countries. It is beneficial to offering the poor, disconnected Africans limited web access to services like health, education, jobs, communication and local content at no cost to them.
However, the recent network issues on Facebook, WhatsApp and Instagram experienced in most parts of Africa this past week have also served as a sober reminder of how economically disruptive relying on Facebook’s Libra could prove to be should a similar outage occur again.