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OpEd

Banks need to rethink the value of their products as Facebook launches Libra

 

CryptoSavannah Director, Noah Baalesanvu. (PHOTO/Courtesy)

By Noah Baalessanvu

Regardless of whichever side of the fence you lay, Facebook’s announcement of Libra is huge. Its implications range far and wide but before I get ahead of myself, let me put some context.

The evolution of crypto over the years has been bumpy, to say the least. From the very quiet beginnings of bitcoin to the mass attention its is gathering now, there is as much interest as there are misinformation and confusion about cryptos.

Despite this, we have seen unprecedented growth in the crypto market indicating increased faith in decentralized finance.

Africa too hasn’t been spared from the crypto hype. While initially being marred by scams and cons, significant value has moved to cryptos with major markets like Nigeria, Kenya and South Africa with significant crypto holdings also trading activity.

That said however cryptos have not yet broken into the open market facilitating the buying and selling of goods and services.

Even in the online marketplace cryptos are barely making a move. This is because in my view an easy on and off ramp has not been created yet.

There are great projects that are addressing this and we should be seeing some moves soon however when you compare to the ease of Mobile Money transactions, we are not seeing a comparative crypto move yet!

This was until a few days ago when Facebook announced Libra – their homegrown cryptocurrency. Now I won’t enter into an analysis of its economics and technicals – there is a lot of material on that already. I want to draw our attention to what it means when the biggest social media company takes a stab at a financial product.

We have not seen this scale before! With almost 2 billions users this would arguably be the world’s largest bank and payment system all in one.

But why should we care? Well, when peer to peer transfers are free, and on and off ramps are as easy as downloading an app or just enabling the feature on your existing WhatsApp or Facebook apps? Then why do i need Mobile Money or Mpesa? As banks go digital this one move will render many of the services they offer now or are planning to offer almost redundant.

I know there is still a long way to go before we see an actual Libra coin out in use but in this one year as Facebook (and its partners) fine tune Libra, banks and payment platforms will need to think long and hard about what business value they bring to the market and how they will compete with such a behemoth.

Speaking of Facebook partners, there is VISA, Mastercard, Paypal, Uber, etc… I find it interesting that the biggest payment platforms in the world are teaming up to create Libra. That should be a sign!!!

Some other news that made headlines, albeit less noisy, Ripple the world’s third-largest crypto just partnered with Moneygram to facilitate remittance payments…again food for thought.

I will part with this thought – Africa is creating the world’s largest single market – CFTA.

With the big moves, we are witnessing how will we integrate, participate, and compete in the economy of tomorrow

It is imperative that we not only embrace this new technology but start integrating and innovating assuring our place at the table.

Africa will be at the economic table of the world, the question is are we seated AT the table or are we ON the menu.
Noah Baalessanvu is the founder and Head of strategy CryptoSavannah, the organisers of the forthcoming Africa Blockchain Conference.

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Noah Baalessanvu is the founder and Head of strategy CryptoSavannah, the organisers of the forthcoming Africa Blockchain Conference. 

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