The unbanked population in Sub-Saharan Africa could soon find support in the form of DMC, a blockchain-based platform that aims to make the business of mobile money transfers more affordable while also encouraging financial inclusion.
The goal of cryptocurrencies is, arguably, to become a global medium of exchange. By not relying on third parties and their resultant fees and commissions, users will be able to save money while enjoying cost-effective, cross-border payments. This benefit is, of course, not just reserved for international companies paying their overseas workers. It can and should be used to assist the unbanked population, which are the billions of people who have little or no access to financial institutions.
More Affordable Cross-border Payments
Instead of building actual banks in these far-flung areas, these users, of which some have access to a smartphone or the internet, could stand to benefit immensely from cryptocurrency usage. There are many industry pioneers who are working towards making this process easier for the unbanked and for those who are spending exorbitant amounts on transfer fees. One such person is South African banker Shaun Burrow.
According to Pulse, Burrow has provided some alarming numbers when it comes to this unbanked population as well as what those living in poverty have to contend with when transferring money. He says:
I started researching the entry-level market and I was simply blown away to learn that 1.7 billion adults don’t have access to basic financial services and to learn that in the remittance space, families are paying about 45 billion US dollars a year in fees on the funds they are sending home. This is money being diverted from the poorest of the poor. The cost of payments to Sub-Saharan Africa and within Sub-Saharan Africa is the highest in the world, they range from 10 – 20% of the money being sent home. It’s simply an unjust tax on ordinary, hardworking people.
Encouraging Financial Inclusion
To combat this, Burrow founded DéMars (DMC), which is a blockchain-based platform that aims to foster financial inclusion and reduce the high costs associated with traditional remittance processes. DMC will be targeted at approximately 1.7 billion unbanked adults living in the developing countries of Sub-Saharan Africa, two-thirds of which own a mobile phone.
In addition, it’s about creating a fully functioning ecosystem that will support users while encouraging this inclusion. Smart contracts will be used to facilitate honest and transparent trading, and once the platform is deployed, developers will be able to create apps and provide other services.
However, it’s not just about business. Burrow explains:
This project is extremely close to all our hearts. Being inter-African immigrants ourselves, we personally send money home every month and have to pay exorbitant fees each time. We also saw how our Zimbabwean friends and colleagues in South Africa were taken advantage of and how their funds were often stolen when they were forced to use informal channels. You often only get one chance in a lifetime to make a real difference. To be honest with you, we completely stumbled on this, but it’s definitely our one shot at “making an impact”. Personally, I feel I’ve been training for 15 years for this “job” and I’m going to make damn sure that our technology and ultimately our solutions have a real, tangible impact on the communities we serve.
The mobile phone business definitely appears to be booming in Sub-Saharan Africa. Approximately $19.9 billion was made in mobile money transactions, which equates to over 60% of the global figure. Africa has also seen an increase in mobile phone purchases, which can only help in encouraging financial inclusion through platforms like Burrow’s.
DMC hopes to launch its beta version by the middle of next year.
Do you think that this could be the financial solution to Sub-Saharan Africa’s unbanked problem? Let us know in the comments below!
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