Vodafone is the latest company to withdraw support from Facebook’s digital currency Libra amid tough monitoring and regulations from regulators. The attention created by Libra seems to scare away other multinationals who are not accustomed to such tight regulatory spots as Facebook. The telecommunications company joins the likes of MasterCard and PayPal who fled the scene earlier in 2019.
Vodafone to Focus on M-Pesa
In a statement made by its spokesperson, Vodafone announced its decision to withdraw. It also added that it would continue monitoring the Libra initiative and would not rule out future cooperation. The statement also revealed that Vodafone would be focusing its effort on M-Pesa as it seeks to remain committed to the goal of extending financial inclusion.
Works on Libra began as early as 2017. Facebook announced in 2019 that it would be launching the digital currency this year. That was before the summons in regard to its digital currency began.
Plans are to peg the token on commoditized assets in an effort to avoid the volatility being experienced by other digital currencies. Libra seeks to avoid the path Bitcoin and Ethereum underwent where they lost 65% of value in under a year in 2018.
The Regulation Challenge
The digital currency industry is a highly unregulated industry, and this has led to the challenge Libra is facing today. Major regulatory bodies like the European Commission had the European parliament have disapproved Libra, at least until a regulatory framework has been laid down. Other regulatory bodies have expressed similar disapproval.
eBay, Stripe, Booking Holdings and Visa in addition to MasterCard and PayPal are some of the multinationals that have withdrawn support for Libra. It remains to be seen whether Libra will continue with its plans amid the regulatory pressures and the crumbling down support.
M-Pesa’s Success in Africa
Vodafone’s M-Pesa platform was initially launched by Safaricom, a subsidiary telecommunications platform in Kenya. M-Pesa, which was launched in 2007 is a successful mobile phone-based money transfer, financing and microfinancing platform that has experienced huge successes in East Africa. The platform has spread across the markets of Africa, the Middle East, India and Eastern Europe.
One of the reasons for M-Pesa’s success is the fact that over 62% of sub-Saharan Africa remains unbanked as per a report by the World Bank Global Findex. M-Pesa’s credibility in the market is also a huge plus for the mobile money platform.
Although the platform is performing well in the market, some regions remain unexploited, although this may change in the coming months. Plans are underway to expand the service in seven new African markets including Ethiopia where Vodafone does not manage a mobile network.