The Lesotho government recently signed a memorandum of understanding (MOU) with the Apollo (APL) Foundation for the creation of an all in one cryptocurrency. This step makes the country one of the first on the sub-continent to take definitive steps towards an official embrace of this fintech.
Apollo’s focus on Africa
Thesele Maseribane Lesotho’s Minister of Communications and Technology signed the MOU on behalf of the government while Anthony Mokhele, the chairman Apollo Africa who is also the chief executive officer African Development Funding group (ADF), signed for Apollo Foundation.
Lesotho one of the continent’s smallest countries with a population of 2.1 million people is now following in the footsteps of Asian nations that are leading the world when it comes blockchain adoption.
In a chat with AfricaBlockchainMedia, an Apollo supporter on Twitter revealed that this MOU announcement was a culmination of the organization’s decision to focus efforts on the African continent. Steve McCullah, the chief executive of Apollo, has reportedly relocated to the continent to work with African countries that are plagued by hyperinflation.
McCullah had not responded to our inquiries at the time of publishing.
Meanwhile, in a letter released earlier in the year, ADF—whose mandate is facilitating funding of solutions that uplifts Africa societies—says it identified Apollo Currency Africa as the suitable cryptocurrency following an investigation into ‘emerging technologies (that) enable our vision to create wealth within Africa.’
ADF cites Apollo’s ‘independent blockchain’ which comes with ‘endless’ features as reasons for its endorsement. ADF is hopeful that more African countries will similarly adopt this technology.
Hard-line stance towards cryptos
This progressive decision by the Lesotho government is apparently at odds with many other countries on the continent that still maintain a hard-line stance towards cryptos. Recently, the Central Bank of Tanzania (BoT) issued public notice warning citizens of that country against dealing with cryptocurrencies.
BoT contends that cryptocurrencies are not legally authorized and thus violate Tanzania’s foreign exchange regulations. This latest decision by BoT decision fits well with a blueprint often used by some central banks on the continent over the past few years. The blueprint has been instrumental in deflating public interest in cryptocurrencies and has thus helped to stall a wider adoption of this fintech on the continent.
Private players exploit vacuum
The resultant leadership vacuum has not stopped private and commercially oriented players from seeking to harness this technology. An introductory whitepaper, purportedly authored by South Africa telecommunications giant MTN, reveals just how far the mobile network operator (MNO) has gone in its attempt to create a token that it hopes will act as a universal digital settlement currency for all financial uses cases for all parties.
In the paper, MTN states that it wants to create a digital currency, the MTNCoin Digital currency which will run on the Stellar Blockchain. MTN also hopes this token will instantaneously become the biggest ‘reserve’ in Africa.
In addition, MTN believes its token will be able to help solve some of the continent’s long standing challenges like the $60 billion remittance market that is characterized by exorbitant costs and long transaction times. The MTNCoin also aims to address Africa’s widely known problem of low banking and financial services penetration and the subsequent high proportion of the adult population that is unbanked.
Privately issued cryptos not currency
However, the same document, which is dated 29 October 2019, is careful not to identify the MTNCoin as a currency that competes with government issued fiat money. South Africa, which is where MTN is headquartered, has just like many of its peers, issued statements that essentially warn again use of privately issued cryptocurrencies.
Separately, through a consultation paper released earlier in the year, the South Africa Reserve Bank (SARB), which is regulator of the financial services industry, warned that:
“Crypto assets may create conditions for regulatory arbitrage while posing risks.(While) the financial system and all participants operate in a highly regulated area, which assists in ensuring a sound and safe financial system. Crypto assets however, perform similar financial sector activities without the need for third-party intermediaries and without similar safety mechanisms. This leaves the crypto asset environment exposed to potential financial and consumer risks.”
This is one of the many reasons the SARB has shied away from endorsing cryptocurrencies as legal tender, a point the MTN paper duly notes.
SARB consultation paper subsequently defines cryptocurrency as a digital representation or token of value that can be used for payments within a ‘private community.’
Overcoming opaque regulation
MTN says its token is such a digital representation and as such it is free to move globally across the entire MTN global footprint and be used by all its subscribers.
The introductory paper uses terms or phrases like MTN subscribers or network to show that this currency only works in this private community. However, given the size of MTN’s footprint on the continent, it is easy to see that this token will serve a very large ‘private’ community but without upsetting regulating entities such as the SARB.
The respective (or prospective) moves by Apollo and MTN show that with or without regulatory endorsement, cryptocurrencies and their use are expected to grow. Public warnings like that issued by BoT seem not to have had that death knell effect on this market and perhaps that is why Lesotho is moving in a different direction.
A force for good cannot be suppressed permanently. Blockchain is a revolutionary technology that will benefit humanity in many ways and the more this becomes clearer the more it becomes a necessity.
Governments need to move with times and allow this technology to grow.