This is a major breakthrough for digital platforms across Africa. Less than 9 months after another technologically focused finance solution startup, Sarwa Capital, opened its shares for public subscription, Fawry, the Egyptian digital payment solution has announced it is ready to open itself to the public too by going on its First Public Offering (IPO )
Here Is What The IPO Is Going To Look Like
Although the IPO would come late August 2019 or early 2020, Fawry is only ready to list 36% or more of its stake in the company on the Egyptian Stock Exchange.
The company is eyeing proceeds between EGP 2 and 2.5 bn, which would make the offering the largest Egypt has seen since Emaar Misr raised EGP 2.28 bn in 2015.
It would also value Fawry at EGP 4.5–5.5 bn. The offering will consist of a substantial international component, with the roadshow is set to cover the GCC, European, US, and South African markets.
The offering will include a private placement for institutional investors and an initial public offering (IPO) for retail investors in Egypt at the same price, said investment bank EFG Hermes, which is managing the sale.
The offer price is not yet known as the bank did not give any indication on the expected offer price.
Fawry’s managing director this month told Reuters the company had begun preparing for the IPO on the Egyptian Exchange and that the process would be carried out in 2019 or early 2020.
Financial advisor FinCorp, which Fawry hired to conduct a fair value study, is due to submit its report to the Financial Regulatory Authority within two weeks, after which the book-building process will begin, the sources hinted.
Fawry’s expansion plans include increasing its points of sale, buying new payment machines, and developing Fawry Pay. Fawry also signed an agreement with Dubai Islamic Bank last month to launch a trial run of its services in the UAE this summer.
Here Is Why This IPO is Significant For African Technology Focused Startups
Fawry is owned by local and foreign investment banks and was founded in 2009. About 8% of its shares are in the hands of management and employees.
Fawry’s network processed 600.1 million transactions last year with a total value of 34.2 billion Egyptian pounds ($2.1 billion), EFG Hermes said in its statement.
Fawry made core profit of 152 million pounds in 2018, up 41.2% on the previous year, indicating the increasing viability of FinTech business model across Africa.
The last IPO by a private company on the Egyptian Exchange was financing solutions business Sarwa Capital last October.
Indeed, this IPO shows that Fintech in Africa has increasingly become more profitable as banks. The ability to pay dividends from profits is a major factor every business owner should have in mind before deciding to embark on IPO, and with Fawry which basically runs online with little or no physical presence doing so, this is a major announcement that digitally-focused businesses have finally come to stay.
This notwithstanding, so much credit has to go to the acquisition that happened as far back as 2015. In 2015, a consortium of international financial investors acquired a majority stake in Fawry, a deal that valued the company at EGP773 million (US$100 million) and saw the company adopting an expansion strategy outside of Egypt. The investors are the Egyptian-American Enterprise Fund (EAEF), pan-African private investment firm Helios Investment Partners, and the International Finance Corporation.
* $1 = 16.5600 Egyptian pounds
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
Enables developers to instantly verify users on mobile web products.
Truecaller has announced the global launch of its Truecaller SDK solution exclusively for the mobile web platform. With this, Truecaller SDK now supports all the key mobile platforms across Android, iOS, React and now mobile web including Progressive Web App support. Developers can access the mWeb SDK from Truecaller’s global developer portal.
Across emerging markets like India and Africa, mobile web-based experiences on smartphones are proving to be the first point of discovery for users trying to access products and services online. One of the key challenges in these markets has been to on-board users using email or other modes and getting verified using the inefficient OTP process.
This SDK solution on the mobile web is intended to simplify this process for developers through its OTP-less and free to use phone number based verification solution, allowing their users to seamlessly and securely access services using their Truecaller credentials.
This ensures there are reduced barriers along with fewer user drop-offs and resulting in increased growth in verified users that contributes to minimized business risks for the developer.
Commenting on the launch, Priyam Bose, Global Head, Developer Platform & Relations, Truecaller, said: “Our vision has always been to enable the developer community by providing them with solutions that help them to build user-focused, trust-based and growth-oriented products.
User onboarding and verification continue to be one of the critical use cases for developers as it is crucial in creating the first impression for their users in terms of building a seamless and secure product experience. On an average, developers in growth markets are starting to see anywhere between 40%-60% of their users now coming from mobile web, giving us more reasons to launch our Truecaller SDK solution for mobile Web interfaces.”
This launch extends Truecaller’s philosophy of building and solving problems at scale for users and developers globally, with value-driven functionalities. Truecaller SDK service for the mobile web platform can be used to fulfill use cases such as mobile number based signup, login, checkout, verification, and more such touch-points across the user journey.
Early access developer partners for this service also shared their experiences.
Mukund Laddha, Product Manager, OYO, said: “At OYO, we have been expanding globally at a rapid pace. Improving user experience during authentication has been a key area of focus. This integration with Truecaller presented us with an opportunity to present users with a reliable alternate login method with a large presence across countries. This has made user on-boarding on the web more fluid and frictionless.”
Zairus Master, the CEO, Shine.com, said: “At Shine.com, our constant endeavor is to improve our end-user experience by adopting best-in-class technologies. As an early access partner, the integration with Truecaller’s verification solution for mobile web platform will help candidates simplify their registration process on Shine.com and facilitate a constantly active and verified set of candidates on the platform, complete with their updated contact details. We believe that this product integration will give Shine.com a competitive edge over other job portals which solely rely on traditional, OTP-based verification.”
According to Udit Tyagi, Product Head, Times Internet Limited – Indian Languages News Business: “In the ever-evolving world of PWA’s the gap between app and mWeb is slowly fading away and users expect uniformity and seamlessness in terms of experience and onboarding irrespective of the platform.
By leveraging Truecaller SDK for mobile web, we have been able to improve the on-boarding experience of users in our canvas of mobile web apps. In our case, onboarding conversions via Truecaller are 41% higher compared to standard onboarding processes.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Nigeria’s aspiration for universal internet coverage has received a boost with the materialization of a $100 million loan from the Government of India.
The facility arranged by the EXIM Bank of India is the result of a close collaboration between the India High Commission in Nigeria and the Federal Ministry of Communications. The deal was facilitated by the immediate-past Minister, Alhaji Adebayo Shittu, who had promised a 70 percent broadband penetration by 2021.
The loan from India is expected to accelerate the deployment of solar-based mobile telephone sites in the country’s vast rural areas. Officials of the communication ministry privy to the details of the plan said no fewer than 1,000 sites can be built within 12 months once the two countries seal the agreement.
The credit facility from India is expected to be devoted to financing Nigeria’s Rural Broadband Network and the deployment of robust masts that will rely on alternative power sources, especially solar power. The plan is hinged on the government’s determination to extend telephone services to all rural communities at a relatively affordable cost while ensuring that identified bottlenecks experienced in urban areas are minimized.
Early this year, Shittu had disclosed that the government was desirous of fast-tracking the implementation of the National Broadband Roadmap by rapidly deploying less-expensive telecoms masts in the rural and remote areas. The plan, he explained, would provide access to telephone services and rapidly increase broadband penetration in hitherto hard-to-reach regions of the country.
The latest statistics from the Nigerian Communications Commission (NCC) has indicated that broadband subscription stood at 63.2 million while actual broadband penetration increased to 33.13 percent in May this year.
“I am optimistic that if we put all the current efforts together, in another two years, we should be able to attain 70 percent. My ambition is two years rather than the five years being postulated,” the former minister said at a conference organized by the Association of Telecommunications Companies of Nigeria in February this year.
The minister premised his hope on the $100million loan from India, saying: “The current mast that the telecom operators use is very expensive to maintain. They rely on electricity, and we do not have electricity all around the country. So we have a situation where somebody who wants to build a mast of N40million would also have to acquire a 200KVA generator and fuel it.
“For this reason, we have redirected our effort at getting solar-based masts which will also have 50km radius so that if you have a land area of 100km, you will have two masts. It is cheap to maintain and all operators can depend on it, rather than having the rural operators to construct their own masts or lay their own cables.
“We are doing all of these, and I believe that within the next two months, we should have an approval from the Indian Government for work to commence on deploying this to all rural areas in Nigeria”
Figures from the NCC indicate that there are about 120 million internet users in Nigeria, most of them in the urban areas. Internet penetration is a little above 33 percent, although the commission is working with the National Broadcasting Commission (NBC) to introduce Television White Space to further deepen broadband penetration.
Although the Nigerian communications industry has attracted huge investments of recent, experts believe that a robust telecommunications network is important for economic growth in the country. Indeed, the Executive Vice Chairman of NCC, Prof. Umar Dandatta, has noted that while the present portfolio of $68 billion investment in Nigeria is huge, it is by no means adequate for one of the fastest-growing telecommunications markets in the world.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Africa Finance Corporation, the leading infrastructure solutions provider in Africa, announces today it has financed Aker Energy A.S. (“Aker Energy”), a subsidiary of Aker ASA, one of the highest-quality-rated companies in the Norwegian market and a leader in oil, gas, and industrials.
AFC’s support is through investing in US$100 million of convertible bond notes with an intention to participate in follow on fundraising activities. The funds will be used by Aker Energy to finance the development of the Deepwater Tano Cape Three Points block (“DWTCTP” or the “Asset”), a block offshore Ghana containing multiple oil fields.
The Asset is owned by joint venture partners, including Aker Energy (50%), Lukoil (38%), Fueltrade (2%) and a 10% carry for the Ghana National Petroleum Corporation (“GNPC”), wholly owned by the Government of Ghana. The Pecan field, which is the most appraised in the DWTCTP block and the field to be developed in the first phase, is an oil field estimated to contain reserves of about 334 million barrels of oil equivalent.
This investment is aligned with AFC’s overall natural resources strategy, which entails building a portfolio of value-added assets across the Energy value chain. By taking an early equity financier role in operational or near-operational upstream assets. AFC can enhance the revenue potential of African states to generate revenue required for investment in infrastructure and social services for its growing populations.
This investment also marks the beginning of AFC and Aker’s mutually beneficial relationship in the exploration and production sector across the African continent; AFC will offer support to Aker, open new opportunities, and mitigate potential geopolitical risks. Aker, with its proven track record of delivering complex deepwater projects on time and budget, and a network of affiliates, such as Aker Solutions, leading subsea equipment, and services provider, is an ideal partner for AFC, as it seeks to broaden its partnerships with developers within the natural resources sector.
The Republic of Ghana (Ghana) which became an AFC sovereign shareholder in 2018, having acceded to membership in 2011, will benefit from this project through increased revenue and government royalty and taxation income. Deepwater Tano Cape Three Points field is one of Ghana’s principal hydrocarbon assets and is expected to contribute to Ghana’s near term target of an annual production volume of 500,000 barrels of oil equivalent per day.
Samaila Zubairu, President & CEO of AFC, commented on the announcement: “This is an exciting milestone for Africa Finance Corporation – we have partnered with the
subsidiary of one of the most highly respected international oil, gas, and industrials companies to support its first project in the African market as an operator. This is an opportunity for AFC to invest alongside a technically and financially strong sponsor that requires project development expertise and public sector advice in Africa, both of which AFC is ideally placed to offer.”
Jan Arve Haugan, CEO of Aker Energy, added: “We value AFC’s vote of confidence by collaborating with Aker Energy and the commitment to further strengthening this partnership going forward. We believe AFC will be a valuable partner to help Aker Energy navigate the opportunities and challenges that lies ahead of us.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
TECNO SPARK 3, a smartphone model by TECNO, a global premier mobile phone brand, has been awarded as the smartphone brand of the year at the 2019 edition of the Africa Information Technology & Telecoms Awards (AITTA).
AITTA recognizes customer service, innovation, and excellence in Africa Telecom and Information Technology industry. The reputable awards now in its third year and has been acclaimed as one of the most prestigious and biggest platforms recognizing excellence and innovation in the African telecoms and technology industry.
TECNO SPARK 3 was awarded as the phone of the year as a result of its cutting edge features as well as its outing market outing positive reception of the TECNO brand loyals and customers. This is the only smartphone recognized by AITTA this year. As one of the most remarkable devices to “light up” the photos, SPARK 3 have been upgraded by AI technology to furthermore advanced the camera features to be available in Africa, middle-east and Southeast Asia market.
Starting their business from the Africa market in 2006, TECNO has been Africa’s leading smartphone brand and was the first dual-SIM handset supplier to the African continent, which boosted an astonishing 53% of all Smartphone sales in Africa in the year 2011. Focusing on providing high performance and cutting edge smartphone that uses the latest technology and at a sweet price point, TECNO smartphones have become incredibly popular throughout Africa due to the exceptional value-for-money they offer.
TRANSSION, TECNO Mobile ’s parent company, its brand portfolio comprises leading mobile phone brands in emerging markets. In 2018, TRANSSION sold 124 million mobile phones globally.
IDC figures for 2018 show that TRANSSION ranks 4th in global mobile phone brands and holds the largest market share in Africa. Their global sales network covers more than 70 countries in emerging markets including Nigeria, Tanzania, Kenya, Ethiopia, Egypt, India, Pakistan, Indonesia, Vietnam, and Bangladesh to name a few.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Temenos, the banking software company, today announces that Barko Financial Services selected Temenos software to replace its legacy systems, in both core and front office, to offer a compelling and personalized customer experience.
The microfinance institution will use cloud-native, cloud-agnostic Temenos T24 Transact, the next generation in core banking, and Temenos Infinity, the breakthrough digital banking product.
Barko Financial Services is in the process of applying for a banking license with the ambition to launch a retail bank that will challenge the status quo in South Africa by offering financial products aimed at better meeting the needs of lower-income South African consumers – Temenos will provide the technology to enable this strategy.
The microfinance institution has over 170 branches and caters for millions of modest-earning, but salaried South Africans such as government employees, mineworkers, and civil servants. Currently, it takes Barko Financial Services 25 minutes to onboard a client and 10 to 15 for a new loan application.
With Temenos’ packaged, integrated software, Barko Financial Services will dramatically reduce the time to originate loans, targeting re-loan applications to be completed in under two minutes and new loan completion in under seven minutes. The aim is to give customers, who are mostly located in rural areas, a compelling digital experience using mobile devices, thereby eliminating the need to visit a branch.
By selecting Temenos’ end-to-end digital banking platform, Barko Financial Services will benefit from accelerated project timelines and drastically reduced the cost of deployment. The microfinance institution is expected to go live in six months. Cloud-hosted Temenos Infinity will allow Barko Financial Services to gain product agility and take new products and services to market faster. Temenos T24 Transact will enable the business to benefit from operational efficiencies at a lower cost of ownership.
Temenos has more than 25 years of global banking expertise and a local presence in Africa. Temenos consistently invests over 20% of its revenue into continually enhancing its packaged software, to develop the richest and deepest functionality in the industry.
Kobus de Wet, Chief Executive Officer, Barko Financial Services, said: “We are delighted to be working with Temenos as our strategic technology partner. Temenos has a worldwide reputation for robust, scalable banking software and an extensive presence in the African region.
We selected Temenos’ packaged and open banking software to transform our customer experience, offer personalized products and services and drastically lower our total cost of ownership. With Temenos, we will be able to launch capabilities faster, if we get approval to establish a bank, and provide innovative products which are simple to use and tailored to add value to our target customers. We wish to offer lower-income customers a personalized experience that is typically reserved for private clients.”
Jean-Paul Mergeai, Managing Director – the Middle East and Africa, Temenos, said: “Technology is playing a pivotal role in making financial inclusion a viable option for everyone. We are delighted to partner with Barko Financial Services, which joins the Temenos family, and it can leverage our experience of serving over 220 microfinance institutions as well as our expertise in helping new banks to launch.
By selecting our cloud-native, cloud-agnostic packaged software Barko Financial Services will benefit from a fast implementation. Barko Financial Services will be best positioned to leverage technology innovation to offer an outstanding customer experience at a reduced cost. We look forward to working with Barko Financial Services as it transforms the services that it offers to its customers.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
As part of efforts aimed at deepening fintech penetration across Africa, Channel VAS, the global premium fintech, and data analytics company, is happy to support the Mobile 360 Africa event, holding the position of Fintech Sponsor in this prestigious event that is taking place July 16-18 in Kigali, Rwanda.
With most of the Channel VAS’ 30-plus countries of operation being in the African region, events like Mobile 360 Africa, which is part of the GSMA Series of global events are a prime opportunity for the company to network with key players in the mobile industry and showcase its innovative ideas, aiming to improve people’s financial inclusion in underserved and underbanked areas of the continent.
According to Mr. Bassim Haidar, Channel VAS’ founder and CEO, of Channel VAS “as a global leader in the Fintech field, Channel VAS is always keen on supporting major events like the M360 Africa, which promotes inspirational and disruptive ideas, like the services we offer, to shape the continent’s mobile and digital future. With the Channel VASvision being the financial inclusion of unbanked populations in Africa, coming closer to other major players in the mobile ecosystem to work together towards that goal is facilitated through events, likeM360 Africa.”
“Mobile 360 Series – Africa aims to showcase how mobile connectivity is providing a foundation for innovation and entrepreneurship across the region, delivering a range of essential services across finance, healthcare, and digital identity,” said Akinwale Goodluck, Head of Sub-Saharan Africa, GSMA. “We are looking forward to welcoming our speakers, guests, and sponsors in Rwanda next week and discussing the positive and transformational impact mobile is having throughout this incredible region.”
A delegation of Channel VAS executives will be attending the event and will have important meetings with some of the region’s major businesses, aiming to expand the delivery of the company’s services towards financial inclusion to more countries and people in the region.
Channel VAS is offering Airtime Credit and Data Credit Services, as well as other innovative Mobile Finance and fintech services in over 30 countries worldwide, covering most of West Africa, South, and East Africa as well as several Middle Eastern and Asian countries. The company’s expansion is supported by a strong portfolio of proprietary intellectual properties on the products and tools offered to MNOs and businesses across the globe.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Siemens and Plan International Germany have signed a Memorandum of Understanding (MOU) to collaborate on future humanitarian projects to assist marginalized populations across Africa, with initial emphasis on Sudan, specifically displaced communities affected by conflict in neighboring South Sudan; The partnership will start by addressing the educational and infrastructure needs of communities in the White Nile state, including hybrid solar solutions in areas where access to decentralized energy is urgently required to enable sustainable development; Plan International is a child-centered community development organization that assists the most vulnerable in more than 50 countries, including Sudan
Siemens has signed a Memorandum of Understanding (MOU) with Plan International Germany that will see the two organizations working together to provide education, aid, and infrastructure to marginalized communities in Africa. The initial focus is on remote regions in Sudan, where Siemens and Plan International will provide aid in the educational and training sector, starting in White Nile state. Plan International is a child-centered organization that aligns with Siemens’ goal to support sustainable growth in the region.
With this agreement, Siemens further solidifies its commitment to significant humanitarian efforts in Sudan to address basic human needs and essential infrastructure. Siemens follows a clear business-to-society model in all countries and communities where it operates, and the goal is to directly impact the quality of life of the citizens of Sudan. Siemens and Plan International will focus on the renovation and modernization of 2 schools in the White Nile region incorporating a hybrid electrification solution for the schools and surrounding community.
According to 2018 data collected by Plan International, Sudan continues to receive ongoing significant influxes of refugees into areas such as the White Nile State. The majority of refugees are women and children (88%), who arrive in poor health after traveling many days to reach Sudan, often by foot, and who are in urgent need of protection, nutrition, shelter, and health support.
There are over 170,000 refugees living across 8 camps in White Nile. Over-congestion remains a serious concern, with all camps currently hosting populations beyond initial capacity.
According to Sabine Dall’Omo, CEO of Siemens Southern and Eastern Africa, “This area is in desperate need of sustainable solutions. While short-term aid is welcome and much needed, our aim is to provide self-sustaining solutions in education, skills development, and training, as well as a hybrid energy solution to state, benefit the marginalized populations in areas struggling to keep up with the influx of refugees.”
As a technology company with a footprint across Africa, Siemens has a keen understanding of the impact energy infrastructure has in marginalized areas. Access to electricity is the catalyst that enables access to education, food security, healthcare, and sustainable growth.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
The Kwik app comes with an integrated geolocation system and offers an efficient transportation service for small packages (up to 25kg) or documents.
French start-up firm, Africa Delivery Technologies has launched an app on both Apple Appstore and Google Play aptly named the Kwik (https://KWIK.Delivery/) which aspires to quickly become the Number #1 of last-mile delivery services in Nigeria.
“Kwik aims to become the first platform for last-mile delivery in urban areas in Nigeria before extending its scope to neighbouring countries. We’re targeting 100,000 deliveries per day in three cities before 2021”, explains Romain Poirot-Lellig, Founder & CEO of Africa Delivery Technologies (ADT), developer of the Kwik app.
Kwik connects independent delivery partners, either owners and/or drivers of a vehicle, with customers who need reliable, affordable and flexible delivery solutions. The Kwik app comes with an integrated geolocation system and offers an efficient transportation service for small packages (up to 25kg) or documents, following the same model as Go-Jek, Uber or Taxify.
Kwik’s value proposition is simple and straightforward: to ensure the fast, reliable and efficient delivery of a package or envelope in Lagos, Nigeria’s business capital. Currently, Kwik’s competitors offer a service that takes 12 hours and costs between 2,000 and 3,000 nairas (4-8 euros) per delivery from Lagos to Lagos. Kwik promises to offer a service of higher added value within 2 hours and for a third of the price, with integrated geolocation and proof of a delivery system that offers the highest degree of security available on the market.
The service offered by the company is available through the Kwik app or via a web browser. The couriers are geo-located in real-time. The payment can either take place beforehand by credit card via the Nigerian fintech Paga’s system (12 million users) or in cash. Kwik focuses particularly on B2B clients and allows them to create tour deliveries on the fly, set up recurring delivers; manage users, and so on. Additional insurance services are currently under development.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Take it or leave it, Facebook is up for the greatest revolution that would hit the cryptocurrency market. This move would probably renew discussions on the adoption and legitimacy of cryptocurrency. While we wait for this to happen, here is what the introduction of Facebook’s new cryptocurrency, Libra would mean for ordinary Facebook users when finally launched in the first half of 2020.
In Simple Terms, This Is How The New Cryptocurrency Termed Libra Would Work
At a go, Libra will allow Facebook users to purchase goods or send money online by using Libra. In other words, Libra is now a currency like Dollar or Yen or Pounds, although it could better be called digital currency. To be able to use Libra, you just need your Facebook or Whatsapp account.
A Libra wallet called Calibra Wallet would be built into those apps. You can also create a separate account using Calibra wallet if you are not on Facebook or Whatsapp. Calibra wallet is an app on its own which you can download from Google Play or other similar platforms.
Instagram messages won’t be included, for now. Calibra will then let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost.
Facebook notes that Libra’s:
“Success will mean that a person working abroad has a fast and simple way to send money to family back home, and a college student can pay their rent as easily as they can buy a coffee,” Facebook writes in its Libra documentation.
You can also use it to make purchases from your favorite online shops that are themselves accepting Libra. Libra is not some physical money you can see or touch, but rather some sort of computer coins or money, if you may call it. But these computer coins or money have the same value as your normal dollar or Euro notes.
Once you log on to Calibra, you would see some Libra to buy. Attached to each of these Libras is the dollar or yen or euro equivalent. Once you purchase a Libra it would be backed by a reserve fund of equal value held in real-world currencies.
The idea of Libra is that you will cash in some money and keep a balance of Libra that you can spend at accepting merchants and online services. You will be able to trade in your local currency for Libra and vice versa through certain wallet apps, including Facebook’s Calibra, third-party wallet apps.
For those who do not have bank accounts but use smartphones, they can purchase Libra by visiting local resellers like convenience or grocery stores where people already go to top-up their mobile data plan or buy air time credit.
“I am not sure that this is the smartest thing for Facebook to be doing, as it will invite further regulatory scrutiny, but it sounds like they’re determined to give it a try,” said Michael Pachter, managing director of equity research at Wedbush Securities.
Facebook is trying this new method because it plans to completely eliminate the transaction fees you pay when you buy or sell with credit or debit cards.
Source: Facebook Libra Documentation
Setting a libra account is simple. When you first sign up, you will be taken through a Know Your Customer anti-fraud process where you will have to provide a government-issued photo ID and other verification info. Due diligence would also be conducted on customers and suspicious activity would be reported to the authorities.
The Support Libra Is Getting From Payment Platforms Shows Libra Is Headed For Success
With this announcement by Facebook of Libra coming into use soon, there are already signs that major world payment platforms are already behind Libra. Facebook appears smarter here.
It knows that leaving the work to be done alone by itself would mean low adoption of Libra globally so it has engaged founding members of the Libra Association, a not-for-profit which oversees the development of the token. The reserve of real-world assets that give it value and the governance rules of the blockchain. The Association is headquartered in Switzerland.
Over 28 members are set to be inaugurated as founding members of the association and their industries. The list of these members, as previously reported by The Block’s Frank Chaparro, includes:
Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
Libra Association members
“If we were controlling it, very few people would want to jump on and make it theirs,” says Facebook’s VP of blockchain, David Marcus
Unlike Regular Cryptocurrencies, Libra Is Less Volatile and Has Reserves To Back It UP
Volatile crypto is one which was valued $18,000 at 9 AM in the morning today but came down to $15,000 in the evening around 5 PM. This is a problem Facebook’s Libra intends to solve. The social media giant announced that:
“The Libra Blockchain is a decentralized, programmable database designed to support a low-volatility cryptocurrency that will have the ability to serve as an efficient medium of exchange for billions of people around the world.”
Again, reserves backing Libra will be of a mixture of “low-volatility” assets like bank deposits and government securities in currencies from stable central banks like USD, GBP, EUR, and JPY.
Hence, if someone cashes out from the Libra Association, the Libra they give back are destroyed/burned and they receive back the equivalent value in their local currency. This means there’s always 100% of the value of the Libra in circulation, collateralized with real-world assets in the Libra Reserve. It never runs fractionally. And unlike “pegged” stable coins that are tied to a single currency like the USD, Libra maintains its own value.
The Libra Blockchain Is Faster Than Other Blockchains
For starters, blockchains are digital blocks where your payment or transaction history are being stored. What this means is that once stored, the information lives there forever. Now, the Libra Blockchain is designed to handle 1,000 transactions per second. This beats Bitcoin’s 7 transactions per second or Ethereum’s 15. The blockchain is operated and constantly verified by founding members of the Libra Association, which each invested $10 million or more for a say in the cryptocurrency’s governance and the ability to operate a validator node that powers the Blockchain.
Now here comes the issue of privacy. Cryptocurrencies such as Libra store all transactions on a widely distributed, encrypted “ledger” known as the blockchain. That could make the Libra blockchain a permanent record of all purchases or cash transfers every individual makes, even if they’re stored under pseudonyms rather than real names. Facebook said if people use Calibra or similar wallets, their individual transactions won’t be visible on the Libra blockchain. Only time will tell, considering that Facebook is still looking for ways to benefit from the whole Libra hype.
This is A Huge Opportunity For Early Businesses That Want To Deal In Libra
Facebook is making Libra a big deal for early businesses that would choose to trade in Libra. Facebook, through Libra Association, is giving a huge hope to developers and merchants who would work with Libra. The Association plans on issuing incentives, possibly Libra coins, to validator node operators who can get people signed up for and start using Libra. Wallets that pull users through the Know Your Customer anti-fraud and money laundering processor that keep users sufficiently active for over a year will be rewarded.
For each transaction they process, merchants will also receive a percentage of the transaction back. Businesses that earn these incentives can keep them, or pass some or all of them along to users in the form of free Libra tokens or discounts on their purchases. This could create competition between wallets to see which can pass on the most rewards to their customers, and thereby attract the most users. This is like eBay or Spotify giving you a discount for paying in Libra, while wallet developers might offer you free tokens if you complete 100 transactions within a year.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.
