I’m not entirely sure what is going on in the Central African Republic (CAR). More importantly, citizens of the country don’t either.
Who are the Central African Republic ?
Despite possessing vast natural resources – gold, oil, diamonds, uranium – the African nation is one of the poorest countries in the world. This is due to a variety of factors, most of which stem from its colonial history. Since gaining independence from France in 1960, there has been extreme instability between various religious, social and ethnic groups, which in combination with differing political ideologies has meant a lot of violence, displacement and minimal opportunity for growth.
The most recent outbreak of violence came in 2013. Malaria, HIV and malnutrition are also rampant, with the life expectancy one of the lowest in the world at 53. The maternal mortality rate of 8.9 per 1000 births, while the literacy rate is also among the world’s worst at 37%.
Bitcoin is legal tender in the Central African Republic
Clearly, this is a country with a lot of problems. However, it is against this background that President Faustin-Archange Touadéra has introduced Bitcoin as legal tender. By all accounts, this came as a surprise, with the President announcing in a series of cryptic tweets that the country was heading towards such a move.
Resources lacking
The move, while commendable along ideological terms, appears wildly premature at best, however. Bitcoin relies on the Internet, and only 10% of the population has regular web access.
Never mind security, education and access to drinking water – remember, since 2013 there has been constant conflict in the nation, with many massacres along religious lines. The nation has recruited the Russian mercenary Wagner group to fight against the rebels in what is an increasingly bloody civil war, and now is viewed as a Russian ally.
Tokenisation of resources
Last week, the nation took it one step further. Moving beyond Bitcoin and deeper into the cryptocurrency space, the President announced they would be launching their own cryptocurrency, titled Sango Coin. The “national digital currency” will go on sale tomorrow, July 21st, with a minimum investment of $500 required, with the amount to be paid in other cryptos.
The website says that it will “facilitate the tokenization of Central African Republic’s resources for worldwide investors”, although how this will work is very unclear to my eyes – never mind the average CAR citizen with no Internet access, never mind a career in cryptocurrency.
“Sango Coin will be the currency of the new generation of the Central African Republic,” Touadera said, again without elaborating on the details.
Conclusion
There is no way to swing the move here – this is an extremely irresponsible, and dangerous, economic move by the CAR government. All sorts of theories are circulating as to “why”, given it is such a curious decision. Some even believe there are Russian implications, as the country looks to turn away from France and take a more favourable position with Russia. Others say this will enable the establishment’s ability to partake in corruption and other illicit financial activity.
But whatever the reason, this is wildly reckless and unfortunate. The Central African Republic has enormous problems – they don’t need some sort of state-sponsored cryptocurrency with minimal explanation and details to “tokenise” their natural resources. It feels rushed and spontaneous too, rather than pre-meditated and planned. Extreme experiments like tokenising your own resources via novel cryptocurrencies are not the right thing to be doing when your country is struggling in nearly every other category.
Honestly, I’m not sure what a lot of the Sango Coin stuff even means. More worryingly, I wonder whether the President does.
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