Why Africa’s Policy Makers Should be Worried About Virtual Platforms and Virtual Currencies

In a lot of ways, Facebook is more like a government than a traditional company. What does this mean for Africa’s Governments, fintech industry and policy makers?

“In a lot of ways, Facebook is more like a government than a traditional company” – Mark Zuckerburg

The rise of virtual internet platforms such as Facebook, Whatsapp, Telegram, Kakao is challenging established regimes of state and sovereignty, monetary policy and issuance of currency, control, ownership and governance of virtual resources in developing countries in Africa.

Billions of users, including Africans are spending more time on virtual networked platforms that command the attention of far greater audiences than the populations of individual nation states. WhatsApp has 1 billion, Telegram 200 million users and Facebook has 2.3 billion users worldwide.

Now, these virtual platforms are all getting into the business of  issuing currencies using ‘blockchains’ or shared ledgers to monetize all the possibilities of economic activity within the confines of their platforms. 

Out of all of them, Facebook’s Libra coin drew the most attention. No surprise at all considering the sheer size of its 2.3 billion people user base.

What does this mean for Africa’s fintech industry and policies, that tech giants from overseas can monetize the digital economy of Africa through non-sovereign means including issuance of digital currencies?

What follows is a transcript of conversations between Michael Kimani  and Andile Masuku, about the current shift to internet virtual platforms, and currencies, and what lies ahead for Africa’s Fintech policy.

Michael Kimani is Head of Business Development East Africa at Zippie, a mobile blockchain platform, a Fintech Innovation Advisor for Visa and Secretary General of the Blockchain Association of Kenya. He is one of East Africa’s renowned digital money analysts.

Andile Masaku is a Co-founder and Executive Producer at Africa Tech RoundUp.

Some parts of this Q&A were pulled from a podcast with Andile, while some of it are from phone discussions with Malak Gharib of NPR and Ronit Ghose of Citi Bank.

The structure is presented in the format of a Question and Answer. Enjoy!

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5 Reasons Why Facebook’s New Cryptocurrency ‘Libra’ is Bad News for Africa

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.

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.

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How PayPal & the UK Government are nudging Kenyan Online Workers to Bitcoin

Kenyan online workers, PayPal and the UK Government are entangled in a mess that is paving way for Bitcoin and cryptocurrencies

A spat between the UK government, PayPal and Kenya freelancers has got everyone mixing up issues.

“Thousands of jobless graduates from Kenya who help lazy university students in developed countries to cheat academically could soon be forced to find something else to do after the UK government started clamping down on essay mills.

On Thursday, international digital money transfer service, PayPal, announced it was withdrawing its services to essay-writing firms selling to university students. This was after weeks of pressure from the UK government, which insists stopping payments for essay mills would go a long way in beating academic cheating.’ Daily Nation

There are 3 parts to this story.

First, the British Education Secretary, Damian Hinds, says when UK students tap cheap labor in Kenya for their assignments, it is unethical and cheating. 46 university vice chancellors last year wrote to Hinds, calling for the banning of cheating websites.

Secondly, PayPal is caught up in the wrangles for facilitating online payments between UK students and Kenyan freelancers. PayPal has come under pressure to stop processing these payments and declared it will not support unethical academic behaviour by UK graduates. Some people have suggested, cryptocurrency may serve well as an alternative for Kenyan freelancers.

Finally, in Kenya, we are all caught up debating whether it is cheating or job creation, as thousands of graduates are dependent on the thriving business for wages and employment.

This case is a glimpse of tectonic shifts at play on the future of Africa, its youth population and the web economy. It is easy to miss the forest for the trees.

To get at the heart of the matter, we need to go back to 2009 when it all began.

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Why Facebook’s New Cryptocurrency Is a threat to Mpesa and Safaricom

Using blockchain and cryptocurrencies, popular internet platforms, are about to disrupt Mpesa in East Africa, the same way Mpesa disrupted banks.

According to sources, Facebook Is Developing a Cryptocurrency for WhatsApp Transfers known a Facebookcoin. If true, this spells doom for Mpesa and Safaricom as they will soon end up as a commodified dumb pipe, like a utility company resigned to a passive role in the medium to long term future.

Popular internet platforms in East Africa have grown beyond social, and now support value exchange within their closed environments – for example Facebook  and whatsapp, both social platforms where people engage in online trade and biashara.

By adding a US dollar pegged coin known as a stablecoin within its virtual network, more value can be captured and retained within the network until it is absolutely necessary to cash out into local currency.

Facebookcoin, platform based currencies and network cryptocurrencies pose a threat to Mpesa just because of the sheer size of the networks they command and everything that goes on within them. This is great news for Fintech startups and banks in East Africa who can reinvent themselves in a post Mpesa world.

Here is how I see it.

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Blockchain, Identity, Chamas and Africa: A Q & A with Ian Grigg

Way before bitcoin and the blockchain, Ian Grigg was part of a vibrant group of pioneers that pursued the vision of digital cash and financial cryptography in the 90s – what is now call blockchain. It is an understatement to say he has seen it all.

By God! There is too much noise in the blockchain industry. I know because I live it everyday; have been living it for the past 5 years.

Over time, I have devised a method to navigate and filter out the practical and realistic from the bold, utopian-dream proclamations. The trick is to seek out and follow the more sober-headed minds in the industry; these are the older wiser tech heads and the level-headed critics in the industry.

Ian grigg is one of them.

Ian Grigg is an architect and financial cryptographer who has been building, auditing and consulting for cryptographic ledger platforms for over 20 years. Way before bitcoin and the blockchain, he was part of a vibrant group of pioneers that pursued the vision of digital cash and financial cryptography in the 90s – what is now call blockchain. It is an understatement to say he has seen it all.

He is mostly known for 3 accomplishments (amongst others)

Co-inventor of the Triple Entry Accounting Ledger, a concept that sparked the explosion of a $400 billion Bitcoin, cryptocurrency and blockchain industry – bitcoin is the world’s first triple ledger entry system at scale.

The inventor of the Ricardian contract, a canonical design pattern for tying legal contracts into digital assets issued over the internet. His work on Ricardian Contracts foreshadowed today’s blockchain smart contracts.

Confirming the identity of 2 of the members of the team Satoshi Nakamoto that birthed Bitcoin – Craig Wright and Dave Kleiman

More recently, Ian was an architect consultant for one of the world’s largest consortium based distributed ledger protocol, R3 Corda, formed by 43 of the world’s largest banks, a partner at the $4 billion EOS blockchain for business and commercial scale and an audit consultant for Senegal’s Digital Currency roll out masterplan for Francophone Africa, serving under eCurrencyMint on behalf of Omidyar Network.

Today, Ian is a cofounder and Chief Technology officer at Chamapesa, a project using blockchain elements to digitize the indigenous culture of social savings and investments that is prevalent across Africa and the developing world. Ian believes the Chama groups of Kenya and savings groups communities in Africa and Latin America hold the key to designing identity systems for a blockchain powered internet economy.

So when Ian speaks, you listen and pay attention.

I managed to lock him down for a question and answer session, probing his mind on Blockchain, Identity, Chamas and Africa.

Whatever your opinions, what follows is one of the best bits of wisdom  you will come across on the interwebs.

Enjoy!

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