I relish the prospect of a network like Libra permanently disrupting the lucrative cash remittance businesses of large banks and money transfer services" Andile Masuku Technology journalistAs 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 MoneyGram. 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. Image copyrightGETTY IMAGES Image captionThe cost of sending cash in sub-Saharan Africa is 20% higher than any other region in the world 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.
Security risks
African governments are also deeply suspicious of crypto-currencies, like Bitcoin. 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 sceptical nation that the newly introduced Zimbabwean dollar has value. Policy makers in Zimbabwe have argued that the idealised notion of a crypto-currency 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.Behind the jargon
- What is a crypto-currency?: It is has no notes or coins, exists online, and uses a technology called blockchain to underpin it. The most well-known one, Bitcoin, is not issued by governments or traditional banks
- What is blockchain? It is a method of recording data, a digital ledger of transactions distributed across computers around the world beyond the control of one person or entity
- What makes Libra different from Bitcoin? It will use blockchain technology but the digital ledger will be managed by a group of known companies
'Free internet' backlash
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. Image copyrightAFP Image captionIndia opposed Facebook having a monopoly over the internet with Free Basics Dubbed by detractors as the "Internet According to Facebook", many African countries lapped it up. India, quite famously, did not, arguing that it undermined the principle of net neutrality - the idea that all internet traffic should be treated equally - and that it was improper to allow Facebook to deliver a dumbed-down version of the internet to hundreds of millions of people.You may also be interested in:
- 'I make my money from Bitcoin and tasty roast meat'
- Why African millennials can't get enough of Bitcoin
- How Facebook is being used to kill 'gangsters'
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