Facebook Libra: Remembering Internet.org
By now, everyone’s ears and feeds are buzzing with news about Libra, Facebook’s recently announced cryptocurrency. The social networking giant, along with a few dozen other partners, is boasting that the Libra currency and the Calibra wallet will make sending money worldwide “as easy as it is to send a photo.”
Sounds like a familiar ambition-:)
Since the announcement, we have received many calls and emails from our partners and industry players at large to understand what this means for us at MFS Africa, for the African payments industry, and for the continent more generally. You may have seen my short take on it last week on Al Jezeera’s The Stream. Following that interview, I thought I would expand a bit on the subject and share my preliminary thoughts on the Libra project.
Let me recall that at MFS Africa, our mission is to connect mobile payment users in Africa to each other, and to the global digital economy. We do that by integrating to mobile money systems, banks, merchants, and money transfer companies, and offering access to our network of partners through a single API. The any-to-any vision in Africa is complicated by the deep fragmentation of the payments landscape — and the continent itself. So we’re very sympathetic and aligned to the Libra ambition.
So let’s say I’m a civil servant in Zimbabwe. I’m thinking about retirement and I want to make sure my savings are protected. I currently have them in a mobile money account, but I’m concerned about my country’s currency stability, so I’d like to move some of my savings into Libra. The first question is: how do I do that?
Fortunately there’s an easy answer that that question. The Libra platform could easily connect to the mobile wallet schemes in Zimbabwe via the MFS Africa Hub and use its payment rails to enable Zimbabweans to transfer the digital money in their Ecocash account for instance into a Calibra wallet.
The next question, perhaps the main question, is this: would the regulator in Zimbabwe allow it?
Cryptocurrency regulation is a hot-button and dynamic issue across the world, and Africa is no exception. We’ve seen enormous transformations in payments technology across Africa in the last few years, often led by Africa itself — thanks to or in spite of the regulatory environment. Talented tech entrepreneurs are charging ahead and redefining many paradigms when it comes to payment and financial services at large. And there’s no reason to think that Africa couldn’t lead the way in crypto as well. But the timing seems to be off for two reasons:
1) Today we’re seeing regulators still debate the rights of poor migrants to send small values home in traditional currencies
2) Beyond crypto and money transfer, there are some real pressing issues around data protection, identity & authentication that need to be addressed before regulators can begin to grasp the risks and opportunity around allowing bridges between crypto and fiat.
I don’t doubt that the Libra team has thought these issues through. But I have to say that from where I sit, I don’t see payments regulation in Africa moving in a very crypto friendly direction in the near term; we are far from the first “one system to rule them all” solution we’ve seen trumpeted.
Just like it did in 2013 when it announced the Internet.org project, Facebook has managed the grab the world’s attention with this new attempt to use its reach, resources and market power to better the lives of billions in emerging markets. And once again Facebook deserves full credit for having brought this possibility closer to reality, this time through a universal cryptocurrency. For good and for bad. But Facebook also deserves (and I am sure expected) the criticisms and scepticism that Libra is giving rise to. The world is right in questioning the motives (is it as altruistic as it sounds? Is it really about the unbanked?) and the legitimacy of the social network as the custodian of the world’s currency at the very time where it is at its lowest when it comes to the world’s trust.
My hope though is that this time around, Facebook is not going to just quietly back down. If you are wondering about what happened to internet.org, Jessi Hempel wrote a great recap of the Internet.org story in Wired last year. I hope that this time, Facebook will actually stay at it and take in the criticism to better the Libra project; that it will do the hard thing and see it through. Why? Because the world actually needs what Libra is describing; and because few (if any) are better placed than Facebook to deliver it at the required scale.
