Redefining monetary value post-2020 — the best is yet to come.
Before the pandemic
Pre 2020, I had a “normal” 9 to 5 and I knew where my money (which was mostly in Nigerian Naira at the time) went. Measuring the value of something was more straightforward as central banks used data on inflation and unemployment to adjust interest rates and keep fiat circulation to reliable levels.
The inflow of money into startups, stocks, real estate, bonds, and cryptocurrency could be justified as fiat regulation systems based on the laws of demand and supply were in place for countries mainly seen as financial powerhouses. Here are the interest rates and inflation data of some developed countries circa January 2020. (I had most of these figures memorized as I traded a lot of FX at the time):
These figures remained well within these ranges until March 2020 when the pandemic forced a worldwide lockdown. Stocks dropped massively (I bought a few), commodities such as oil saw their value drop to below $0 a barrel (didn’t buy this one, was a bit scared) and the global halting of activities prompted central banks of various countries to inject fiat into their economies. A few regions that did this include:
Europe — put out a total of $2.2 trillion as of January 2021.
Australia — supported their economy with an estimated $68 billion so far.
United Kingdom — paid out over $558 billion so far and still plans to do more.
New Zealand — executed a fiscal stimulus plan for NZ$ 50 billion.
Canada — has a stimulus plan worth about $79 billion.
United States — has the biggest plan we’ve got so far, about $4 trillion.
Two things stood out which convinced me that fiat would be useless as a store of value with times to come. First, a lot of tech bros I know maxed out low-interest loans in Naira with a rate of 1 USD/350 NGN, converted their loans to USD, and traded the bull run of April — December. Most of these loans were paid off by converting dollar profits when 1 USD was 450 NGN. This “V8 double-exhaust” run of profit convinced me that anyone who was “hodling” paper money was taking two steps backward.
FYI: The initial terms of the loan never changed.
Secondly, all the fiat pumping done by different governments to revive economies was beginning to have ripple effects which showed that paper money can’t be used as a reliable measure or store of value today. Not only did the pandemic expose the flaws in existing financial models, but it also opened up new possibilities to how people would interpret money and value.
New gatekeepers of value
Crypto, non-fungible tokens, and stocks are seeing increased adoption as means of value. Recently, Tesla purchased a huge amount of Bitcoin and plans to make the cryptocurrency a payment method for its vehicles. Personally, I’m a huge fan of the refund policy they came up with:
- Say when you bought your Tesla, you paid $50,000 in BTC and the value of Bitcoin has increased since then — you will be refunded $50,000 in fiat USD.
- If you bought your Tesla for $60,000 in Bitcoin and the value of Bitcoin has decreased since then, you will be refunded in Bitcoin.
And Africa??? While it may seem like we’re playing catchup over here, a few African startups — backed by the influx of VC capital to the continent ( part of that $4T has to find its way here innit?) — have broken the mold, redefining what money means for Africans.
- Flutterwave: “The plumbing by which the water flows” — Flutterwave’s innovation has been able to create value for a lot of businesses and customers across Africa. With virtual bank transfers, invoices, virtual account numbers, virtual cards, and multi-currency payment infrastructure — it’s safe to say they are at the forefront of redefining payment processes in Africa.
- Rise: Leading the way in easily accessible investment management and embraced by millennials and Gen Zs across Africa, Rise’s investment plans are carefully formulated to hedge against inflation and beat the overall market. With an astounding team of finance experts and money managers, what makes Rise even more interesting is that it was launched in February 2020 — just a month before the market “went to ****” due to the pandemic, yet still managed to deliver on its investment plans for users.
- Piggyvest: Financial prudence among millennials wasn’t cool until these folks came along. Every feature of their product from Safelock to the quarterly investment plans screams “VALUE” from a hundred yards out.
Cryptocurrency has been heavily adopted as well, with huge indigenous players like Quidax — who made cryptocurrency available to end-users and changed the face of the game which made external players realize the potential in Africa.
There has also been increased adoption of gift cards, vouchers, and airtime as stores of value and remittance. I think using these items to pay for goods and services will be a rising trend with time. There are a few players with key infrastructure for this — leading the charge is Reloadly, which provides API integration and direct access to over 800 telco operators globally ( more than 150 of these are in Africa currently ).
The future 🚀🚀🚀
It’s very exciting to see where all this is headed. Even with the unpredictable regulative practices being enacted by most central banks in Africa, the innovative army of entrepreneurs in Africa continues to march on. Ten years from now:
- Will my cousin who lives in Accra be able to purchase a Mandarin course and pay in Chinese Yuan airtime using Reloadly?
- Will my other cousin, who works in Nigeria, be able to take as many rides as she can on a Safeboda, and have the costs be deducted from her investment with Rise?
- Will my business partner be able to import 80 tons of wheat from North America using cryptocurrency as a form of payment with Quidax acting as an escrow?
- Will my significant other be able to take a loan from Flutterwave based on their Piggyvest savings score?
The possibilities are endless and while we may all desire peace and profit, we as an ecosystem need to collectively do the groundwork to ensure the best scenario is achieved. For only we can create the future we want and no other. Cheers!
