What does Facebook’s Libra mean for Africa?

In a region on the vanguard of mobile payment systems, Facebook's cryptocurrency may get a good reception despite regulatory and trust issues.

p2p payment roundup facebook messenger splitting the check
Ben Patterson / IDG

Despite intense regulatory scrutiny, Facebook is moving ahead with plans to roll out next year a digital payments systems using its new cryptocurrency called Libra, which will allow users to make purchases through the social network and its popular messaging service WhatsApp. Given Africa's track record as a global leader in mobile payment systems, and the widespread use of WhatsApp as a messaging system, the continent seems ripe to not only adopt the proposed system, but to innovate how it is used.

African enterprises and consumers alike have shown intense interest in alternative payment systems, driven by the need to address the region's large "unbanked" population -- those without access to traditional banks. There are a number of payment platforms being launched in Africa, for example, on blockchain distributed ledger technology. Various traditional banks have also deployed digital banking services designed to cut transaction costs, to appeal to a broader customer base.

Meanwhile, mobile payment systems have had a growing user base across sub-Saharan Africa for years, with international partners now also seizing the opportunity to tap into these markets. Safaricom's M-Pesa has cornered the market in East Africa and now boasts more than 28 million users across the region. Recent partnerships with companies like Western Union and PayPal have further extended the functionality of these mobile payment systems, which show no sign of slowdown.

Africa embraces mobile money

And the rest of the continent is also embracing the possibilities of mobile money. In fact, more than half of the adult population of Benin, Ghana, Cote d'Ivoire and Senegal use mobile payment systems actively, according to the GSM Association's State of the Industry report, and more than 17 million new users joined the mobile money system in sub-Saharan Africa in 2018. In this context, then, Libra is an interesting prospect.

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