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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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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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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