A few days ago, Facebook announced its plans for Libra, its crypto currency that should be launched in a few months.
Described as a free currency that will cross borders through the Facebook platform. One of Libra’s main objectives is to enable the fringe of the world’s unbanked population to easily transfer funds.
This positioning could be particularly important for the African continent (about 20% bancarization rate according to the Africa Banking Forum), one of the regions where the number of Facebook users continues to grow.
Indeed, the African continent receives a significant amount of remittances from abroad from its diaspora. According to the World Bank, these “remittances” could reach USD 40 billion by 2018.
However, sending money to Africa, especially sub-Saharan Africa, is more expensive than transferring to any other region. According to the World Bank, in the first quarter of 2018, $19 was required to send $200 to Africa. The fees are 20% higher than what you would pay for a transfer to any other region of the world.
Libra, on the other hand, announces much lower transfer fees, which could really boost the transfer of funds to Africa. This situation clearly threatens money transfer companies.