In 2019, Facebook intended to let its two billion users – more than 139 million of whom reside in Africa – carry out digital payments via their Facebook app and famous messaging service WhatsApp employing a new crypto-currency called Libra.
Now that this currency has launched, we foresee that this will have profound implications in the continent that has a huge amount of remittances but less banked regions. In Africa, people carry out their payments and expenses via a mobile cash system. In the continent where day robberies are common and people’s cash isn’t safe, this currency can have a major impact on Africa’s payment system.
With that, if people living in Africa apply the Western Union method to send money to their families in some other region of the world, that may deduct 20% of the sent money which is too much. In such circumstances, a currency like Libra can be certainly worthwhile.
Libra and Bitcoin
While the world is running crazy over Bitcoin, Forex, and other currencies’ trading, Facebook Libra is making its place among them and no doubt the currency can be genuinely helpful for people like Africans.
However, if you are not living in Africa where this Bitcoin trading is banned and interested in Bitcoin trading, you can try the bitcoin formula app. This will assist you in using the right tactics to gain more profits.
We know that both are cryptocurrencies but let me inform you of Libra’s difference from Bitcoin. The thing that makes both different is that Libra does contain blockchain technology but its digital ledger is controlled by some known companies. However, Bitcoin’s ledger is completely decentralized.
African states are also deeply skeptical of cryptocurrencies, like Bitcoin. Such skepticism is also due to challenges in levying taxes, the risk of unwittingly facilitating unlawful activity and money-laundering, and of course the probable exposure to crypto-hackers.
The lengthy list of countries that have, in some way or another, restricted the usage of crypto-currencies includes Nigeria, Kenya, Ethiopia, and even my native Zimbabwe, which is nice on its way to being a cashless community.
Thanks to the thriving adoption of mobile money services, you can now imagine how Libra will grow in countries like these and especially in Africa. The countries where money cash is usually preferred, Libra will easily make its place over there.
The Risk for Remittance Companies
The quote of the day by Laolu Samuel-Biyi is,
“Libra will cannibalize the business of traditional remittance companies, but it will not immediately replace them.”
The risk will ensue when Libra will get saturated sufficiently that people are satisfied holding and approving it, that they don’t require to purchase with fiat or vend into their local currency. They can just simply pay it online that will be completely disruptive, and not only for remittance firms. If it functions though, Kent says conventional remittance firms which aren’t technology-based will be the main ones to suffer.
Increase in Annual Income of Libra
The finances of targeting African and formulating markets with Libra make a lot of significance for Facebook. Given the much smaller advertising corporations in developing industries including Africa compared with North America and Europe, the social media colossus earns considerably lower average income per user in developing industries.
Libra has many positive impacts on people living in Africa by being an online payment system that ensures it will break grounds there. However, it has bad effects on remittance companies of Africa. Their fiat currencies may disappear and if Libra offers high-quality services, the normal currency can completely vanish. Let’s see what happens in the future!