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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How Digital Platforms are Shaping Africa’s Informal Economy

A new digital generation of informal African entrepreneurs have adopted and adapted gig economy tools and digital platforms to meet their needs for a flexible and negotiable digital marketplace. Apps that can drive demand and scale reach affordably are transforming African markets, opening up new opportunities for young Africans.

With contribution from Niti Bhan

When people think about the informal economy, this is the picture that often comes to mind.

What is often forgotten, is that the next generation of informal economy actors – mama mbogas, boda boda okada riders, wakulima farmers, traders, taxi drivers, matatu touts, drivers et cetera in Kenya and East Africa will be vastly different from the women depicted here.

The coming generation of Africa’s informal economy are today’s millennial digital natives – hungry, educated, exposed to global trends, with all the tools available to them like everyone else anywhere in the world. Only with no prospects of formal employment on the horizon.

‘Informal’ is no longer synonymous to the streets, associated with the roadside, automatically defaulting to the marginalized or vulnerable – it is not a disease to recover from. The informal economy is an equal opportunity, organized and commercial operating environment offering Africans the chance to achieve their aspirations.

Africa’s prosperous future will only be realized by embracing the informal. This is not a choice.

While my thoughts are presented in the context of East Africa, I believe it resonates with the broader, global ‘gig’ economy. So perhaps my 60,000 ft view from Nairobi, East Africa rings true for the rest of the world.

Allow me to paint a picture for you using one of the sectors of the informal economy – trade.

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How The Chinese, Africa’s Most Popular Browser , And A Bitcoin Mining Company Are About To Change African Payments

Africa’s most popular mobile browser, Opera is about to radically change the payments landscape in Africa.

China Loves Africa 2 by Michael Soi
Michael Soi’s China Loves Africa Collection

I think before this blog and thread, the global cryptocurrency community will not appreciate the strategic relevance of Bitmain’s $50 million investment round into one of Africa’s most popular Chinese owned mobile browser, Opera. What they will not see is the Fintech connection at play in East Africa, where the wildly successful mobile browser is creeping into digital financial services like mobile payments. For the payment professionals of East Africa, the pertinence of this investment on the future of their industry will not dawn on them perhaps until it is too late.

Last week’s SEC’s disclosure on Opera’s newest investor for their $115 million IPO, was the best strategic news on cryptocurrency ‘adoption’ in Africa I have seen in the last 5 years with far reaching implications on e-commerce, trade and payments for the region than appears at first glance.

My choice of a header image above accurately captures increasing Chinese influence on Kenya and Africa, at both state and commercial level.

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