Facebook has announced its plans to launch libra, a global currency in an attempt to help the 1.7 Billion People around the world. I personally have a problem with Facebook, a company which has repeatedly been proven not to be trustworthy when it comes to keeping my data safe and secure, moving from one scandal to the next wanting me to trust them with my money.
However, the idea itself can’t be ignored especially since I live in sub – Saharan Africa where 66% of the region doesn’t have a bank account. Our financial sector, the banks and the financial institutions that operate in this space taking advantage of the poor and powerless in the region by making international payments take several days to complete. Their service fees are too high, financial institutions are sometimes hundreds of kilometers away from a large base of their customers and the customer service is poor which leave many confused on how to use these institutions services. Looking for help tends to leave unfortunate individuals vulnerable to scam artists.
Clearly, a change is needed and Facebook’s currency could force the change that so we desperately need.
According to Facebook, Libra is both a global currency and financial infrastructure, which is powered by a version of blockchain developed by the company. To put it into plain English, it is a secure and fast way to send and receive money, using calibra their cryptocurrency wallet for your phone. You will go to a registered libra agent and use your local currency to buy libra (Facebook's currency) and once its have been deposited your calibra wallet you can purchase anything you want from all who accept the global currency and if you want your local currency you can go to any agent and exchange your libra for the equivalent amount.
We now know how it works, let us see how it helps the unbanked
There is a lot of distrust of banks in my region, this is to be expected as banks can just close down claiming economic hardships and take their customers deposited funds and there is almost no way to get your money back. you can imagine how many people just keep the bare minimum in their accounts which leads to people carrying around quite a lot of cash, this is dangerous as there is a chance of getting robbed and if you get robbed you lose all your money with no chance of recovering it. With libra even if your phone is stolen your money remains safe and u can recover your money from your calibra wallet on another device.
Getting payment services from banks is expensive and the requirements individuals need to satisfy get for example an EDC machine (swipe machines) are out of the reach or just not worth the hustle. An affordable and easy payment system would help many businesses give convenience to their customers. If they are selling something like furniture or a car instead of having their potential customers carry large sums of money or go to the bank to perform a bank transfer which can take days, they have an option which sees them get paid in real time.
Banks are sometimes hundreds of kilometers away from their clients and when an emergency happens to a loved one who might be in another country, u can imagine how long it will take for a person to travel that distance to send money to their loved who desperately need it. With libra since it’s a global currency, they can get those funds almost immediately.
Facebook says transactions will cost only a few cents which is a big difference from the fees we are charged in our financial institutions. Fees as high as 9% of the amount being sent and if it is going to another country it can be as high as 25% of the amount. Libra would go a long way in saving money for the poor.
Libra, if executed properly can help millions of people around the world and especially the Africans in my regions.
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