Facebook is plotting a new cryptocurrency dubbed ‘Libra’ for its vast social network scheduled for release in 2020. Libra coin, a virtual currency, will be governed by Libra association, a conglomerate of 28 American and European corporations who will decide everything from who can join the network, process transactions and how much currency will circulate.
As an African, it is my opinion that the peoples of Africa, its governments and central banks should be concerned, because we risk ceding more control, from the little we have now, to a digital colonial version of the internet.
That is because, for many emerging ‘mobile first’ consumers from East Africa the internet is indistinguishable from Facebook and the internet does not exist outside of this singular social network.
In a future post, I will write on how Africa can redress this imbalance.
But today, I have 5 Reasons Why Facebook’s New Cryptocurrency ‘Libra’ is Bad News for Africa.
Libra coin Is Digital Colonization by Proxy
Libra coin and the Libra Association is a digital equivalent of the British East India Company, a joint stock company from the 16th – 19th century that was used by the British Empire to front run its colonial activities in parts of Asia, China, India and Africa.
In contrast to the 1800s, today’s empire’s are born on the web with tremendous power in the material world.
Libra coin and the Libra Association is a neo-form of colonization, where, the global rich northern countries and their corporations, sit around a table and decide what is good for Africa.
The Libra white paper cites a Libra association council – a governing body of 28 American (mostly) and European companies who set all the rules and decisions policy and technical matters of the Libra coin blockchain networks and its reserve assets.
Facebook and Libra coin purports to be a liberator of the bottom billion, rehashing the same old rhetoric, that Africans are all too familiar with – 1.7 billion adults worldwide who do not have a bank account [ ] the issue of being “unbanked” disproportionately affected people in developing countries, and in particular women.
Just like the British East India Company used trade as a guise for territorial colonialism, so is Facebook using the poverty trope that has been used and abused by NGOs, white missionaries and colonials in the past to gain entry into Africa for commercial interests.
I find it hard to reconcile a group of American corporations, far removed from the realities of Africans, machinating a grand plan on how to save the unbanked women of Africa. Especially when you consider their recent history of data privacy breaches (facebook) and worker exploitation (uber).
Let’s be honest.
What is really happening here is the American empire is using Facebook and the Libracoin association as a proxy for controlling Africa as we transition into the digital economy and digital currencies.
Libra Coin Is a Threat to African Central Bank and Monetary Policy
The network effects of social networks could saturate Libra coin to a level where Africans are comfortable holding and accepting it, with no need to sell into African currencies. People could simply spend it on a peer to peer basis even for buying and selling of goods both online and offline.
This is a problem because Libra coin is not backed by any African currencies or commodities. Instead, it is backed by a collection of low-volatility assets, including bank deposits and government securities in currencies from stable and reputable central banks.These include the US dollar or Euro denominated sovereign bonds from the European Central Bank or the United States.
The sovereignty of nations has traditionally been pegged to a nation’s control of its money. In each country, Central Banks play the role of controlling the managing the money supply. If Libra coin were to take off as much as social media, this power would be ceded to Facebook and its Libra Association – which does not include any African.
The announcement of Libra coin last week had Central Banks around the world, including the Bank of International Settlement (BIS), the Central bank of Central banks, up in arms over Facebook moving into finance.
“Politicians need to quickly coordinate regulatory responses to new risks from technology companies like Facebook moving into finance, though banks won’t be squeezed out anytime soon, the Bank for International Settlements” The Bank of International Settlement said on Sunday.
There is still no word from the Central Bank of Kenya or other Africa Central Banks on this move by Facebook.
Libracoin is Threat to African Sovereignty and the African People
It is rather sad that trade between African countries is settled using the US dollar and the US banking system. If Africa’s digital economy ends up being powered by Libra coin, we risk sinking deeper into dependence on the United States because management and governance of Libra by the Libra Association is constituted of American corporations and Libra coin is backed by European and American based assets.
Russia, China, Iran and the European Union wised up to America’s control by pushing for their sovereign currencies as an alternative for the settlement of global trade. The introduction of the Chinese Yuan, European Union’s Euro, Russian ruble and to some extent Bitcoin, are rebalancing power in the digital economy.
So what about us? What about Africa? Do we form an association to govern ourselves? With our own currency? Our own networks? Backed by the resources of our own continent? Or a basket of commodities?
We are at a crucial juncture where the dynamics of global politics is shifting as countries jostle to diminish the influence of American corporations and leadership over their sovereign affairs.
If we are not keen on this trend of digital currencies by Libra coin, our vision of a Pan-African digital economy shall once again succumb to dependence.
How do we take control of our future?
Africa Will Give Up Control Over It’s Digital Economy to Libra coin and Facebook
There was much talk of a Pan-African digital economy at the African Tech Summit in Rwanda last month, where Kenya launched a Digital Economy Blueprint for Africa. Yet, our nascent digital economy is built on foreign technology and capacity. It’s laughable.
The introduction of Libra coin and the Libra Association within the Facebook apparatus leaves vulnerable to even more dependence on foreign networks, technology and money.
One recent case between Huawei (a Chinese company) and the United States, after Donald Trump issued a trade ban forcing Google and Facebook to cut ties with Huawei, is a lesson for Africa on how proprietary owners of technology and networks can pull the rug from under us.
The move has forced Huawei to hasten development on an alternative operating system, a fork of Android known as Ark OS.
Meanwhile, over 60% of African smartphones are Chinese and close to 90% run on the android operating system.
In the last 2 years Facebook has been making inroads in building our core infrastructure by sending drones and massive balloons over our skies to supply us with internet. African Telcos now offer Facebook and Whatsapp as part of Free products. Now, they want to build the digital currency of the internet, governed by America’s corporations. If it works, they’ll effectively, own the end to end channel of our interactions in the digital economy.
How can we grow as a people if we are always dependent on proprietary technology built by our masters, that they control, that they can switch on or off at a whim?
Is this how we take ownership of our future?
Big Brother Africa
Facebook probably knows more about us than our friends and families because if we are not using facebook, we are probably on one of their other products like messenger or whatsapp or instagram. With the addition of a cryptocurrency, Facebook will have access to an unrivalled treasure trove of financial information, over and on top of everything else they have on us.
Facebook’s recent history is littered with a trail of scandals like data privacy breaches, censorship and manipulation. Just 12 months ago, officials in India were infuriated after a Cambridge Analytica expose revealed that Facebook had shared private information on close to 100 million users with political consulting firms to influence sovereign elections.
Given this record, I am skeptical about Facebook suddenly growing a conscience overnight.
Some of their soon to be partners in East Africa are already plotting how to harvest the massive data that Facebook and Libra will gather from East Africans.
Shivani Siroya, the CEO for Tala, a mobile lending company with operations in Kenya, did not hide her enthusiasm about Libra, which she said offered them a platform to scale up their lending operations by tapping into Facebook’s massive cache of data to get into new countries via Standard.
Libracoin will enable Facebook and its Libra Association members to consolidate even more data on our communications, and financial habits, all of which will be owned and controlled by foreign corporations.
Perhaps it is time to start thinking like India and Europe, over how to establish strong data protections for our people. Or even go further and embrace new types of networks models that give full ownership of data to users, so they can choose who to share it with.
We could unpack the evil deeds of Facebook and all the other global tech giants till the cows come home.
After all is said and done, every country is looking out for its own sovereign interests, just like every tech company is in business, selling products and services that users accept to use by choice and free will. No one held a gun to our heads.
I have the most fun writing on Africa and Africans because it is easy to rile up their emotions on topics where they feel disenfranchised. Granted, they have all the right to feel suppressed, because we have been, for a long time.
But we can’t always play the victim card.
Ultimately, the onus is on us, as Africans to be strategic and execute on taking back some semblance of control of our future.
If we are fed up of the white saviour narrative, then we have to save ourselves. No one will do it for us.
On part 2 of this article, I will outline measures on how Africans can be strategic about the digital economy.
Thanks to the Financial Times for the header image sourced from this article https://www.ft.com/content/5535fb3a-91ea-11e9-b7ea-60e35ef678d2