Econet Wireless is now allowing group savings on its mobile money platform, EcoCash, a development the company says will reduce risks associated with cash handling.
The EcoCash Savings Club will earn interest on "all pooled funds" each month.
Saving groups can appoint a chairperson who will undertake the opening of the account while approving members will also be selected from the group.
Savings groups are common in most African communities whereby members in a group put money together for a common interest such as buying properties or for funding functions such as funerals or weddings. Most of these groups appoint a member or take turns to keep the money inside their houses.
"They (saving groups) typically consist of a group of members who each contribute regularly into a cash pool that members borrow from on a rotating basis. While the practice is widespread, savings clubs face security risks in handling cash and difficulties in tracking contributions and withdrawals from members," said an official at Econet Wireless. – ITWeb Africa, May 8, 2015
Evolutionary biologists tells us that humanity itself came from Africa. Now that continent may be leading the world back toward honest money.
The EcoCash concept doesn't seem to offer a full escape from fractional reserve banking. The fact that accounts earn interest suggests the funds find their way into conventional banks. Nevertheless, the framework described ought to work just as well for Bitcoin or any other honest currency. Depositors would have to pay a service fee or accept liquidity restrictions.
Like bitcoin, EcoCash is another example of technology that challenges the modern banking system. It allows savers to keep their money safe from theft yet easily accessible.
Another interesting but perhaps ominous development is in Denmark. There the government apparently wants to follow Citigroup's lead and abolish currency altogether.
As of next year, many Danish retailers and other businesses will no longer have to accept cash payments. Almost a third of the population already uses a Danske Bank app called MobilePay to make payments.
The Danish government should not have forced businesses to accept fiat money in the first place, of course. Nevertheless, we see here again a payment technology that ought to work well with bitcoin or even shares representing physical gold in storage.
Closer to home, last week New York State's top financial regulator granted the first government license to bitcoin exchange ItBit. As a licensed trust company, ItBit will have a bank-like status allowing it to take custody of virtual customer funds.
Whether it happens with bitcoin or some other cryptocurrency, the architecture of a truly free-market banking system is falling in place. Savings and payment processing platforms are slowly encroaching on the conventional banks.
We know which side will win. The only question is when.
