In an exclusive interview, the founder, chairman and CEO of Millennium Finance Corporation, Keba Keinde, talks to Gulf Business about his new venture into cryptocurrency and why his Freedium coin could change the lives of 6 billion people worldwide
WHEN THE GOVERNMENT of the UAE announced last month that it aims to use blockchain for half of its transactions by 2021, it was the latest in a long line of statements to confirm the growing importance and impact of the database technology – not just in the region, but across the world.
Since its invention by Sataoshi Nakamoto in 2008 to support cryptocurrency bitcoin, the incorruptible digital ledger of economic transactions has evolved to become a highly sought-after technology for businesses – so much so that the Middle East and Africa spending on blockchain is expected to more than double this year, according to consultancy firm International Data Corporation.
In Dubai especially you don’t need to look far to appreciate the burgeoning influence of blockchain. The emirate established the Global Blockchain Council, intends to use the technology for all government documents by 2020, and plays host to two major events – the Future Blockchain Summit, taking place this month, and the World Blockchain Forum, which was held at Madinat Jumeirah in April.
It was during the latter event that a new product was officially launched that showcases the power and potential of blockchain technology – a digital currency that could change the lives of billions of people worldwide: Freedium.
Based out of the Dubai Multi Commodities Centre, Freedium is the first commodities-backed digital stable currency, using blockchain technology to provide financing to commodity owners in emerging markets – particularly in Africa, but also in Latin America, Asia and the Middle East.
With plans to be operational by the third quarter of this year, the firm expects to issue its first Freedium coin in Q4, and aims to free developing countries from constraints linked to volatile currencies, limited access to banking services and foreign exchange scarcity.
The currency is the brainchild of Keba Keinde, founder, chairman and CEO of Dubai-based investment bank Millennium Finance Corporation, and now founder and chairman of Freedium.
We meet a day before his launch announcement at the World Blockchain Forum, and as we talk his excitement for the potential of Freedium is palpable.
“In Africa, technology has shown that it can have a fantastic impact and allow the continent to leapfrog,” he says.
“The closest example of what we’re trying to do is with mobile telecommunications. Around 20 years ago in Africa only 1 percent of people had access to a telephone. Can you imagine? Only 1 percent could be connected to the rest of the world.
“With the introduction of mobile telecommunications today in Africa you have 50 percent – in some countries 60 to 70 percent – of the population that has access to the rest of the world on mobile phones.
“They have access to information, they know what is happening, they can be connected to the rest of the world. That has completely transformed Africa and it's potential and we have seen Africa become the second fastest growing region after China for the last 10 years – to a large extent due to this new technology that allowed this vibrant population to finally get connected to the rest of the world.
“Because the African banking sector is extremely weak, Africa is the world leader in terms of mobile money. You have the largest amount of mobile wallets in Africa – twice as many as the United States and growing twice as fast. We went directly from no bank account to mobile banking. And that has had a tremendous impact on the continent.
“I believe that technology today, with the blockchain, can allow us to reach the next level of unleashing the potential of Africa – to be able to transact efficiently with the rest of the world and be connected with the global financial market.”
Freedium works by inviting customers to get liquidity from their commodities in Freedium coins, depositing their commodities in a warehouse as collateral.
“We take that commodity and we develop a hedging strategy that allows us to lock the value of this commodity,” says Keinde.
“We take that value, cut it into small pieces – the Freedium coin – and issue them to your digital wallet. It is issued with the full backing of your commodity and stable to the dollar, thanks to our stabilisation mechanism that allows us to track the dollar within plus or minus 5 percent. It is globally accessible on any device, and you can use it to make international or national transactions without having to go through corresponding banks.
“It is also protected against Black Swan events because we have a basket of commodities backing the currency, so the probability that all of the commodities will drop at the same time is almost nil.”
Available to all developing and emerging economies, Freedium has the potential to reach 6 billion people, or 85 percent of the world’s population. That represents some 60 percent of global GDP.
Keinde says Africa will be the initial focus because “this is where the pain points are most acute”, and identifies four main challenges stifling the continent’s growth: Low banking penetration, weak and volatile currencies, the lack of access to dollars, and price exploitation by international commodity trading companies.
And he argues that Freedium can help overcome these challenges in a number of ways.
“Now that this currency exists you can do so many things,” he says.
“Take remittances. You have $50bn worth of remittance coming into Africa every year. Around 11 percent of those go to the likes of Western Union and banks via transfer fees, and foreign exchange fees. We can do it for free with Freedium coin. It’s on your phone, so if I’m here in Dubai and I want to send it to my sister in Senegal, I press a button and she receives it without anyone else getting involved. It will cut down the cost of remittances to Africa from 11 per cent to less than 1 percent.
“Take another example: trade. You have $1.5 trillion worth of trade each year in Africa, of which 70 percent is not financed by banks – it is on a cash basis. It’s someone in Africa who has money and wants to go buy computers in China to come back and sell them at home.
“If, I am a trader let’s say in Nigeria, I would take my naira, go to the black market, change it into dollars, take a plane to China, change it into yuan, go to Guangzhou, buy my computers, fly back with them.
“Now I can sit in my living room and enter into a smart contract with the supplier. The supplier knows I have the money because it’s digital and the money is blocked. He knows that once he ships the goods and that a third party says the product is shipped, he’s going to get paid. He has zero risk. From the perspective of the Nigerian trader, he knows he’s going to pay only when the third party tells him his order is shipped. He doesn’t have to change money to dollars and to yuan, and he doesn’t have to travel.
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