Facebook’s Digital Currency, Libra In Africa; Good Or Not?

Facebook’s announcement of their new digital currency has taken the world and the entire Cryptocurrency eco-system by storm.

Starting from the first quarters of the year 2020, Facebook has already made its intentions known to its roughly two billion users amongst whom about 139 million of them reside in Africa, that they will be executing virtual payments via its apps through the aid of a new crypto coin called Libra.

Its Effect In Africa

There are reports that this upcoming Libra will have huge effects on the African continent due to a large number of remittances it receives. Also, Africa is taken to be among the least banked regions of the globe.

According to a Zimbabwean journalist that resides in South Africa, Libra may have the power to permanently disrupt huge cash remittance businesses of bigger banks as well as money transfer services such as MoneyGram and Western Union.

Judging from a report made by World bank some time back; the cost of transferring cash in the Sub Saharan parts of Africa was about twenty percent higher than all other regions in the entire globe.

The report went further to reveal that transferring about two hundred dollars to the region and from the region as at the first parts of 2018 cost a huge sum of nineteen dollars.

Nonetheless, the fact remains that the African government has allowed the status quo of the remittance industry. Plus, they have come to depend on mining all of their coffers with remittance linked revenues.

Risks Of Security

It is no news that the African government is overly suspicious of virtual currencies such as Bitcoin. There are some African countries that have in one way or another prevented the usage of virtual currencies. They include;

  • Ethiopia
  • Zimbabwe
  • Kenya, and;
  • Nigeria

Although, Zimbabwe is currently on the path of being a society that is cashless as a result of the increasing acceptance of mobile money services. Due to hyperinflation issues, Zimbabwe has abandoned its very own currency for about ten years and running now.

The country is currently trying their best to reassure a doubtful nation that its new Zimbabwean dollar has some value.

Zimbabwe policymakers have debated that the conceptualized notion of virtual currency does not properly take into any account some of the actual limitations and risks of security. These risks include:

  • Difficulties in the tax levy
  • Risk of enabling illicit activities
  • Money laundering, and;
  • Vulnerability to virtual hackers

These and many more are some of the things expected of African leaders to take into consideration and address with Facebook before its coin emerges.

To Wrap It Up

In the United States, the lawmakers have already brought about a moratorium on Libra until Facebook guarantees Congress that Libra will not leave room for any act of money laundering. This is what is expected of the leaders and government of Africa.

Although, through its white paper, Facebook has managed to outline that Libra is ready to be backed by actual assets and currencies; unlike Bitcoin that functions outside the regulations of central government or even banks.

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