A certain Vilho Mbangu has written, in a Namibian context, an insightful and informative article on the subject matter back in May 2019. This article aims to further inform on a subject matter that is certainly divisive but important, provided that it has the futuristic potential to revolutionize not only international banking but also international commerce itself.
A number of sources define cryptocurrency as a digital asset. Assets are either tangible or intangible. A cryptocurrency is an intangible asset (i.e. you exchange money for something you cannot touch). Cryptocurrencies are currently discouraged in the Namibian financial system based on statutory laws that are broadly based on traditional banking practices.
Anything that has to do with “currency” in Namibia is first and foremost the responsibility of the Bank of Namibia (BoN). Local money supply, or the control of the amount of money moving around in the local economy, is one of the most important tasks of the central or reserve bank, according to the textbooks of economics. The reasons for controlling the supply of money are explicit, e.g. to curb inflation in certain instances and to promote economic growth in other instances, among others. Cryptocurrencies, it is argued, “distort” this whole ideal setup in the sense that the central bank will lose control of one of its most important basic functions, money supply. At this stage an example will help to put the discourse into perspective.
Imagine that someone has funds saved up in some bank and after empowering themselves with the latest high-tech financial information he or she decides to “invest” his or her funds in any cryptocurrency of his or her choice. Assume that the “investor” prudently chooses to invest N$10 000 in a cryptocurrency of his or her choice and is now the proud owner of some 10 “coins” valued at N$1 000 each. Four or five months later, due to either luck or favourable international financial market forces beyond the control of the “investor,” the 10 “coins” are now worth N$100 000 and so the “investor” decides to cash in immediately.
The new bank balance of the “investor,” in his or her own view, may now look healthy to permit the flexing of some financial muscle in the local economy. Wait a minute, as far as BoN is possibly concerned, where did that extra N$90 000 suddenly come from? How does this inflow affect the local money supply and demand equation? Is that not money-laundering? Are those funds possibly aimed at financing terrorism? Is that clean or dirty money?
These are some of the questions that might be standing in the way of the local authorities as far as endorsing and allowing cryptocurrency transactions is concerned. The fears and reservations are understandable, bearing in mind that change is a hard process, and that technological advancements are usually greeted with an air of suspicion, and the fact that the actual financial resources of actual hardworking people are involved. Most of the developed countries, however, have embraced the cryptocurrency phenomenon.
Closer to home, countries such as Botswana, Zimbabwe, South Africa, Kenya, Nigeria and Ghana are not fully opposed to embracing cryptocurrency transactions in one form or another. It is, therefore, important for BoN to start reforming local regulations and have a more open-minded posture towards cryptocurrencies. Namibians out there might be losing out on legitimate life-changing opportunities.
* Abednego Katuushii Ekandjo writes in his private capacity.