Will Facebook’s digital money be good for Africa?

In our series of letters from African journalists, technology writer Andile Masuku looks at what the launch of Facebook’s digital money could mean for Africa.

From early next year, Facebook intends to let its two billion-odd users – more than 139 million of whom are in Africa – make digital payments through its apps and popular messaging service WhatsApp using a new crypto-currency called Libra.

It could have profound implications for a continent which receives a huge amount of remittances – and is one of the least-banked regions of the world, something that has allowed for other innovations like mobile cash payments to take hold in Africa.

As a Zimbabwean living in South Africa, I have become numb to the daylight robbery that ensues whenever I receive money from abroad or send cash to my family back home.

As such, like many other cautious pragmatists, I relish the prospect of a network like Libra permanently disrupting the lucrative cash remittance businesses of large banks and money transfer services like Western Union and Money Gram.

According to a World Bank report published last year, the cost of sending cash in sub-Saharan Africa was at least 20 per cent higher than any other region in the world. The report revealed that sending $200 to and from the region in the first quarter of 2018 cost a whopping $19.

But we must not be naive to the myriad factors responsible for maintaining market inefficiencies and actively engineering economic complexities which corporations like Western Union exploit to great effect.

The fact is, many governments in Africa have enabled the remittance industry status quo and have come to rely on lining their coffers with remittance-related revenue.

African governments are also deeply suspicious of crypto-currencies, like Bit coin. The long list of countries which have, in some way or another, prohibited the use of crypto-currencies includes Nigeria, Kenya, Ethiopia and even my native Zimbabwe, which is well on its way to being a cashless society thanks to the growing adoption of mobile money services.

It abandoned its own currency for 10 years because of hyperinflation, and it is currently in the throes of trying to reassure a skeptical nation that the newly introduced Zimbabwean dollar has value. –BBC

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