Facebook intends to let its two billion users – more than 139 million of whom are in Africa – make digital payments through its apps and popular messaging service WhatsApp using their Libra cryptocurrency.
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.
Can Cryptocurrencies be Better?
According to a World Bank report published last year, the cost of sending cash in sub-Saharan Africa was at least 20% 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.
A Big No To Cryptocurrencies in Africa
African governments are also deeply suspicious of cryptocurrencies, like Bitcoin. The long list of countries which have, in some way or another, prohibited the use of cryptocurrencies includes Nigeria, Kenya, Ethiopia and Zimbabwe.
Policy makers in Nigeria have argued that the idealised notion of a cryptocurrency does not adequately take into account some of the very real limitations and security risks.
Think challenges in levying taxes, the risk of unwittingly enabling illicit activity and money-laundering, and of course the potential susceptibility to crypto hackers.
Facebook in Africa
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 hard to argue that offering poor, disconnected Africans limited web access to services like health, education, jobs, communication and local content at no cost to them is anything but beneficial.
Yet Facebook’s now infamous business model of monetizing user data makes it impossible to ignore the potential adverse long-term impact of allowing such a firm to profit from curating the only version of the internet millions of Africans may ever come to know.
Critics point to the ease with which African governments can cut off the internet and messaging apps, meaning if it suited them they could effectively cut off their citizens from accessing digital cash. Would it be wise for us to become too dependent on Libra?
The UntrustWorthiness of Facebook Libra
The network issues on Zuckerberg’s firms – Facebook, WhatsApp and Instagram experienced recently 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.
As Facebook representatives push back against concerns regarding the extent of the company’s self-interest in the Libra project, we would do well not to forget how it formerly served the world poverty-porn laden rhetoric to justify the global roll-out of Free Basics offering several years ago.
Back then, the tech firm audaciously sold Free Basics, which lets people in some countries access Facebook and other websites without charge, as mankind’s most significant development towards promoting “internet as a right” for all.
On the paradox, if I can send and receive money anywhere in the world, and it can easily be cashed out using Libra, then the world will be better for it.