Is Facebook’s Libra Good Or Bad For Africa?

4 min readNov 22, 2019

The proposed launch of the Libra crypto-currency in the first quarter of 2019 would sure have some significant effects on Africa. This is because out of Facebook’s 2 billion customers, 139 million of them are Africans.

These effects could be a good or bad move for Africa, however many have said that the advantages would out-number the disadvantages.

Before we go further, let us take note of some key points:

· Cryptocurrencies are decentralized, virtual currencies that serve as a medium of exchange and leverage on the blockchain technology to secure, verify and validate transactions.

· A Blockchain is a virtual ledger of transactions distributed across a network of connected nodes.

· Libra intends to become the number one global currency which is going to give it some level of control.

· Libra is different from Bitcoin because it runs a permissioned Blockchain that would be accessible only by members of the Libra Association.

· The Libra Association consist of 28 members (intends the number to increase to a 100) and they include Visa, MasterCard, Uber, PayU, Peace corps and so on.

· Libra intends to be a stable currency by being backed by a number of fiat currencies such as the Dollar, Euro, Pounds, and the Japanese Yen.

The Good Side of Libra for Africa

Libra was developed based on the fact that despite technological advancement as well as collaborations between technological and financial institutions to increase economic empowerment around the world, a large percentage of the world’s population (about 1.7 billion adults) remain out of the financial system because they lack either access to a traditional bank or internet. From a report of 2014, it can be deduced that a large number of this unbanked population are resident in Africa and are estimated to be around 350 million adults which are about 17% of the global total. It’s quite obvious that Facebook would provide an answer, given that the Libra coin is leaned towards serving these set of unbanked individuals.

Nigeria’s Seyi Taylor, a technology product manager wrote about the positive impact of the new currency on the developing world and talked about Libra proving itself to be reasonably handy.

Other positive sides of the new crypto-currency as indicated in the white paper include being a reliable, secure and fast means of carrying out transactions, low transaction fees, the stability of the coin.

The Bad Side of Libra to Africa

Critics have spoken about the negative side of Libra to Africa. A few of them are addressed below.

African Sovereignty May Be Lost

If the digital economy of Africa ends up being powered by Libra, Africa may become more dependent on the United States as management and governance of Libra by the Libra Association are constituted of American corporations; and Libra is backed by European and American based assets. Africa is at a crucial stage where our dynamics of global politics is shifting as countries jostle to diminish the influence of American corporations and leadership over their sovereign affairs. If Libra dominates Africa, the vision of having a Pan-African digital economy may crumble.

The Issue of Despots

Many countries in Africa have in recent times experienced some form of political, economic, social, financial and currency instability. Some people believe that Libra is going to exhibit a lot of financial control in these countries which may lead to the absolute collapse of indigenous currencies. Businessman, Mark Cuban says, “ I think globally and in countries where there isn’t a lot of rule of law or a lot of government instability or currency stability, then it could be dangerous. There is going to be some despot in some African countries that get really upset that they can’t control their anymore and that’s where the real problem starts.

Central Banks in Africa and various Monetary Policies will be Threatened

If wide adoption of Libra occurs up to a point where Africans will conveniently hold and accept it; this could generate a problem because Libra is not backed by any African currency. Central Banks are tasked with the responsibility of regulating cash flow and implementation of monetary policies that would regulate cash supply. If Libra succeeds in Africa, the operations of central banks in Africa would be threatened.

The Pan-African Dream Will Be Lost

The introduction of the Libra coin and the Libra Association would have a detrimental effect on the much talked about Pan-African digital economy at the African Tech Summit that recently held in Rwanda.

Libra is More of a Digital Colonization by Proxy to Africa

The Libra coin and the Libra Association is a neo-form of colonization where the global rich northern countries and their corporations decide what is good for Africa.

Issues of Regulation and Privacy

The plan for Libra to monitor illicit activities is not yet clear. they claim to have measures that would be put in place to hinder criminals, however, have not specified how this would function. Top finance officials of the G7 countries have warned that Libra coin would not come into use until serious regulatory and systematic concerns are addressed. It is also being stressed that since Libra to pegged to some fiat currencies to ensure its stability, highest standards of financial regulation to prevent money laundering or threats to the banking and financial system must be met.

Some critics have warned about the dangers of centralizing control of tomorrow’s money in the hands of a company with a poor track record of privacy and security. Well, Facebook seems to anticipated this and created the Calibra (a subsidiary) to run and keep its crypto dealings keep all financial data separate from social media.