Payment Solutions for Africa

This photo of Stone Money is courtesy of TripAdvisor

A new payment solution is on its way. It’s a cryptocurrency, it’s mobile money. It’s a solution to several issues that plague African governments and the economies they’re meant to support.

In Polynesia, inhabitants historically used RAI stones as currency. These stones were often hundreds of kilograms in weight – too big to be physically exchanged – and even when they were covered by ocean waves, they were still regarded as retaining their value. This is the definition of a fiat currency. By fiat, a population declares that something is valuable, and its convertibility is based on the credibility of that claim. In other words, the value of the rai stone was based uniquely upon a common agreement that the rai stones had value. Once that was agreed, one merely needed to determine how many rai stones would be worth what kinds of goods and services, and so on. But when westerners came to the islands, the rai stones were found to be of limited value to them, because they were not easily convertible (the westerners apparently didn’t like the idea of leaving their currency behind under the ocean). Therefore the convertible value of the rai stone as a fiat currency can be said to have suffered once westerners evaluated it.

What are the lessons of rai stones for African economies in an age where we are witnessing an explosion of cryptocurrencies?  This is something we will be unpacking over the course of a series of articles to be found here.

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