It was only a matter of time that the biggest and most powerful social media platform would join the cryptocurrency scene. to launch their own digital currency known as Libra next year, but are already recruiting partners for the currency, including the likes of Spotify, Uber, Africa’s richest company, Naspers, and other household names. Their reasoning for starting their own cryptocurrency is reportedly to help unbanked people who cannot access financial networks. This is a huge ask considering that is almost two billion people. Many of which are located in Africa, making the announcement of Libra a pivotal moment in the continent’s financial history.
Solving Remittance Costs
It is not uncommon for Africans to seek a better life in Europe, the US or further afield. People will frequently find work in other countries to better their circumstances and send some of their earnings back home to family in Africa. In fact, these remittances make up a fundamental pillar of some African countries’ economy. Most of the time these remittance payments are completed with fiat currencies, but some Africans do own the likes of a and make them using digital currencies.
The issue for Africans sending money back to Africa is that they must contend with high transfer costs. Sending $200 to Sub-Saharan Africa can cost almost 10% of the financial gift. The other issue in these scenarios is time. Sending money between continents using conventional means can be costly for the sender. This is where Libra enters the frame.
Facebook’s Libra will enable hard-working Africans that are spread across the globe to send money back to family and friends in a convenient, fast and cheaper way. Facebook’s overall plan is for Libra to become the cheapest cross-border transfer currency in the world. So, on paper, even though Africans and their economy may benefit significantly, it will remain a digital currency for the world to cherish. The only companies who will not be celebrating its planned success will be remittance companies who have no got the technology or scope to adapt to cryptocurrency usage themselves.
Will Libra be a Success in Africa?
It won’t be plain sailing for Facebook’s Libra in Africa. Although the continent is set up to be a strong adopter of cryptocurrency – using technology, apps and smartphones to transfer money are all common – there are some hurdles to be faced. are against or actively oppose cryptocurrency, making it hard for some Africans to utilise it. The culture of transferring money with apps has been regulated and adopted by the hierarchy. This is something that cannot be said for cryptocurrency in many African territories.