Since BitPesa’s first public product launch in 2014 in east Africa, we have witnessed the way cryptocurrency transactions reduce friction and lower the barrier to entry in markets with shaky infrastructure. When I hear Libra say that it is on a quest to increase financial inclusion, I immediately think about the young, tech-savvy generation in emerging markets looking to trade, code, build, transact, connect and play – populations who do not have PayPal accounts or Visa cards that work from their home country (which includes myself, an American who has lived abroad for 15 years without a US bank account).
But Africa as a continent is complex, because its regions and sub-regions are so very different in culture, infrastructure and incumbent players. While domestic financial infrastructure has boomed over the last decade, there is little financial infrastructure across borders. Regulation, access to power and internet, language, population density, cultural habits and ease of doing business all differ greatly. Comparing South Africa with its neighbour Zimbabwe, or Ethiopia with Sudan, is a way to quickly realise how different each individual market is.
Despite these differences, most businesses and many individuals split their lives between countries. It is therefore essential for Libra – or any similar project – to have a multi-country approach if looking for success on the African continent. For example, South Africa is one of the largest economies on the continent but is filled with populations of people working, travelling and transacting in and across its neighbouring countries. Success in South Africa therefore requires functioning infrastructure in Botswana, Mozambique, Namibia and Zimbabwe as well.
Facebook’s strength has always been in signing partnerships, as evidenced by the reach and power of its launch partners for Libra. However, those are all private companies with relatively similar perspectives to Facebook's. In emerging markets, where there are fewer domestic giants with which to partner, Libra must conduct a precise symphony of working with both public and private players to create an ecosystem for adoption. You can have incredible growth in Nigeria for a domestic product, but without addressing the infrastructure in both the origination and destination countries of remittance transactions, a cross-border product will struggle to gain traction.
At BitPesa, we started as an adaptive company, using a hybrid approach of bank, mobile and cryptocurrency infrastructure to create a platform of streamlined service and efficiency. We benefited from the boom in domestic mobile money systems, which created competition for existing financial institutions, resulting in real-time domestic bank transfers.
This is not the case in every African country and is surprisingly not the case in the US, UK and much of the seemingly financially developed world. Compliance complexities, payment infrastructure delays and individual company operational difficulties still make it hard to complete an end-to-end digital currency transaction unless the participants are existing users with existing stores of digital currencies. When I ask somebody to send or receive digital currency, and they are new to the space, I still have to explain the platform, account set-up and compliance verification, and then wait for their local payment infrastructure to top-up or withdraw from their account.
Libra’s ability to find the right local infrastructure partners, or build its own, will make or break its frontier market strategy. While the American business and finance culture is strong, it is not universally accepted – and there are great swathes of people on the planet who need to be considered on their own terms.
Elizabeth Rossiello is founder and CEO of BitPesa.
This article was originally published by WIRED UK
