(tense music)
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(tense music continues)
In the midst of an economic storm,
a new world emerges, right before our eyes.
It makes me reflect on my childhood,
when something happened to me,
that would shape my perspective forever.
In 1993, at the height of the HIV AIDS pandemic,
my father started a foundation for prevention programs
in Africa.
My family was along for the ride.
While many searched for a cure, he chose a different path.
And listening to local community leaders,
questioning conventional development aid,
and recognizing that just maybe,
the West did not have all the answers.
Three decades later,
I find myself having similar realizations.
My own journey began wanting to build upon a legacy,
harnessing the power of technology to expand the impact.
This paper I'm writing initially aimed to assist
some of the world's leading agencies
on financial inclusion agendas,
but I quickly became overwhelmed
by a financial technology movement
that was already underway.
I started to question if financial inclusion
was more than just buzzwords,
and whether or not the West actually cared about places
like Africa, and the global south.
Was I delusional?
After all, the West grapples with its own problems.
And then, almost like it was scripted,
another pandemic struck,
contributing to more economic uncertainty in the West.
Trade tensions, heightened inflation,
soaring interest rates, recession concerns,
money printing, banks collapsing,
32 trillion in national debt,
one trillion coming from credit card debt.
Some people even had their bank accounts frozen
for showing solidarity and support for others.
Living and investigating in Africa,
watching everything unravel back home,
I refocused my research and dialed it in with a new lens.
With millions of people considered unbanked in the West,
perhaps listening to the challenges faced by those in Africa
who have already lived this economic reality
wasn't as crazy as it was sounding in my head.
As my journey continued, I found myself asking the question,
"Can Africa save the West?"
(tense music)
I think we need to start at the beginning,
where I got this whole idea.
So let's rewind 30 years.
In a tiny village, my dad founded a project.
Sensing a shift in the charitable model,
the idea that Africa needed saving
in conventional ways seemed flawed.
So the community initiated a pilot project,
aimed at integrating the unbanked
into the economy through loans.
Many would call this microfinance.
According to hard local data,
loans were repaid 99% of the time.
No credit scoring system, no fancy credit algorithms,
no technology, no banks.
So why does this matter for the West?
Well, when I came across a story of a group of women
who are trying to own the land they occupy
using these microfinance loans,
it became clear that their unique formula
for loan repayment held the potential
to address an ongoing affordable housing crisis.
- The chairperson of LC3 came to us and said,
"Can you assist me and give these women loans
so that they can put their money together
and go and pay the bank so that they cannot be evicted?"
The landlord had secured a loan from the bank,
and put this piece of land as the security
so that the bank can give him the loan.
And he failed to pay the loan.
That's when the bank came, and wanted to evict these people,
so that the bank can sell this piece of land
and secure the money that the landlord had taken.
They just throw you away.
And you go in there and you have nowhere to stay.
- [Luke] Two groups of women faced eviction
because the landowner wasn't paying the mortgage.
- [Hajat] So we came and had a meeting with the women,
and informed them about the process on
how we give out loans.
It's just the trust from these women.
If one doesn't pay,
then other members will have to pay for her loan.
So the group is the security.
[Luke] So they each get a separate loan?
Yes, each one gets a separate loan.
- [Luke] But together through all of the loans,
collectively, they pay back the bank loan?
Yes.
- [Luke] So the foundation steps in with a loan offer.
With no track record,
credit worthiness is based on the strength of one's standing
in community, known as social collateral.
- We give them a grace period of one month.
Another is that our interest rate is very low.
We want them to be well in their families,
which other lending institutions don't have,
because for them, they just give out loans.
They want interest, they want money back.
[Luke] Is this story a rare exception
in the field of microfinance?
Could trust and reputation be the key?
I left with more questions,
so I turned to a leading microfinance expert
to explore its potential for Western economics.
- There's a dangerous issue in microfinance,
which it straddles both the most charitable
and the least charitable institutions,
which is the repayment rate.
The fact that someone is able to repay a loan
has absolutely nothing to do
with whether that loan actually helped them.
There are many cases,
and this has been seen across the world.
Cases of women being forced into prostitution
in order to repay their loans.
About this job, uh uh, no one like it.
- Well, those banks still reported 99% repayment rates.
The question is, how did the women get the money to repay?
Parents, because of the fear
of not repaying a microfinance loan,
they take their children out of school,
and they get their children to also work
in the family business in order to repay the loan.
So the microfinance institution turns around and says,
"Ha, we have a 99% repayment rate.
Therefore, we helped the client."
Well, not necessarily.
Maybe the client struggled,
and only just managed to repay the loan,
but we didn't hear about that.
- [Luke] These discussions led me to reassess this story
for Western contexts.
But faced with increasing home losses,
groups of women leveraged their community bonds
to access loans from a charitable lender,
and it made me wonder if institutions in the West
could embrace lending with a similar spirit.
(gentle music)
(gentle music continues)
With this story on my mind,
it was hard to miss the obvious clues
for another grounded approach,
funded not by companies and charity,
but by the will of the people.
They're called SACCOs, savings and credit co-operatives.
- A SACCO is a member-user-controlled organization.
It belongs to the people. It belongs to a number of people.
And they mobilize their own capital from their own pockets
and they pool their resources together.
They select the board members
who actually oversee the operations of the SACCO
on behalf of other members,
getting somebody who can lead them,
and then they empower that person to lead them
whom they can trust.
- It's the place that people go when they feel alienated,
or excluded from traditional
mainstream commercial banking systems,
where groups of people come together,
pool money in a cooperative manner,
and then they will share these goods to each member in turn.
- [Luke] So all these years driving through East Africa,
I'd never stopped to think about what's printed
on the side of these buses.
And as it turns out,
these are giant moving billboards for community banks.
- But microfinance institutions are actually companies,
most of them are companies.
But the SACCO, the ideas,
the policies are developed by their members.
In microfinance institutions, you don't share profits.
They go to a few shareholders.
Something has changed dramatically.
Financial institutions have become very preoccupied
with profits and they've become detached
from everyday people and their needs.
And I think ROSCA systems, SACCOs, co-operatives,
provide that alternative, more social humanistic approach
to people's economic development.
[Luke] After my visit to the kingdom,
I needed an example of a SACCO in action.
On more than one occasion,
I made the 10-hour journey from Kampala
to a place called Okere City.
- So this is the road? - Yes, this is the road.
So we have another three hours to go.
We'll ask a few more strangers how to get there.
(traffic noises)
In the late 90s,
the government implemented a blanket policy
of everyone in this part of Northern Uganda
must be resident in the internally displaced people camps.
At that time, most rural Northern Uganda was unstable.
Towards the late 2000s, conflict subsided,
people started returning back home.
And basically this is what they found. A bush.
So they had to start rebuilding themselves,
fighting the legacies of conflict.
[Luke] Reflecting on Ojok's accounts
of rebuilding a community,
I couldn't help but draw parallels
to the ongoing wars in Palestine, or Ukraine.
How do people start over in the aftermath
of such devastating conflicts?
(tense music)
When I was returning home,
was also the same time that "Black Panther" was released.
And I was so mesmerized by the fact that a community,
a fictitious nation of Wakanda,
located within the East African region,
had a resource that they used
to power everything in their country.
And when I returned here, I looked at this shea tree,
and I'm like, "This could be our vibranium."
This could be this resource
that powers our transformation as a community.
So shea butter is one of the most sought-after
cosmetic product.
So I tell the community this, and they can't believe it.
They're like, "But we just eat this here,
and everybody has it."
And so they don't even value it
because everybody's having it.
For you to get this shea butter,
the production process itself is an entire day's work.
And that is assuming
that you already have the dry shea nuts.
They get money from the sale of the shea butter.
The other way they can also get money
is through the dividend.
So if a village member is part of the co-operative society,
they get a small percentage of the profits
that the co-operative society has made through sale.
This is an important global resource
that can play significant role in connecting us.
- That idea of Ubuntu, that's what he's doing.
I am, because you are.
When people have gone through extreme forms
of displacement or crisis,
that's when people turn to one another
to figure out how can we cooperate to mitigate the fallout.
And money pooling is one way that people come together
to repair the harms that have happened in society.
- So Ojok took me to the heart of the community,
where on Saturdays,
the entire village meets to do their banking.
So I'm sitting there,
and in comes this mysterious green box.
- [Ojok] The box usually has three padlocks.
As we can see, three different people must have the keys
for each of these padlocks,
because the idea is that if you give one person
all these three keys,
then they might look for where the box is,
and they'll open the box and take all the money.
So the box is not kept where any of the person
with the keys are.
And so what happens is that each of these three people
must be present for a village saving activity
to be conducted.
So this box basically is village bank.
[Luke] After driving for 11 hours,
the big reveal was a safety deposit box.
How was this a solution for the West?
When you put your money into a bank,
you're not putting it into safe custody.
You are lending it to the bank.
It is safe only if the bank is safe.
Unless the terms of your agreement with the bank
are that you've put your money into safe custody,
banks do offer safe deposit boxes.
You put physical cash into a safe deposit box,
that is your money.
The bank's not supposed to be able to touch it, right?
But you put money into an ordinary deposit account,
you check the terms and conditions of your deposit account,
you'll find you've lent the money to the bank,
and the bank could do what it likes with it.
Technically, it's not yours, but you have a claim.
[Luke] The process of community banking
was surprisingly straightforward.
Proceeds from the shea butter sales
made their way into the box,
becoming the village's well-deserved compensation.
Then came monthly contributions to the SACCO,
interest on loans paid, new loans extended,
and at last, dividends were paid to everyone.
- Inside the toolbox are also money purses.
So I hope there is money in this box, but they are meant to,
so all the savings that people bring
are put into this money purses,
and luckily this group has many.
So this is what remained
after lending out the last time they served,
which was last week.
And they have about 230,000 shillings,
which is an equivalent of about six, US$70.
- And basically what this box represents, is hope.
It's the hope that we can assist each other.
It's the hope that we can transform things
so we have a better society.
And people put their money based on trust
to support one another's activities.
And that box has huge inspiration
of transforming the financial systems that we have.
- Money often is the one thing that destroys it,
not build it.
Want of money tends to destroy it,
whereas gradual money going in that they grow,
that they take ownership of, they take the fund,
they grow the fund, they become part of the fund.
And now that fund is an integral part of the community
that now gives you a far different basis to operate from.
- [Speaker] African people always came together
to collect resources, to give it out to the people in need,
get it back, and continue lending it.
What we are doing here has a lot to do with the refinements
and improvements around what existed in the community.
(gentle music)
- After my visit to Ojok in the heart of the smart city,
I found myself questioning whether or not
the symbolic green box was more than just a metaphor.
But what if this humble green box could be the catalyst
for digitizing informal community banks?
And now that I was looking for it,
I continued to find communities like Ojok's everywhere,
who had already embraced technology
in tandem with their own boxes, helping them track savings,
dividends, and new loans.
However, skeptics would argue
that even by digitizing a SACCO,
financial growth is still limited
to what's inside the community box.
Again, I started to reevaluate if SACCOs are scalable
for Western scenarios, even with technology.
(tense music)
The green box was not limited to Ojok's community.
These boxes were everywhere.
And they are supercharged
by a technology called mobile money.
All the money is kept in that box.
- [Luke] That's the first one I've seen like that.
- [Ssenkumba] Yeah! - That's like a mini...
It's a mobile money kiosk.
(tense music)
- In 2007, I remember walking into the office
of the then Safaricom CEO,
and he'd showed me something and it was called M-PESA,
and he said, "This could be quite sticky."
And this product was designed to facilitate
the movement of money from the wage earner in the city
back to his family somewhere in the countryside.
From that is launched the whole mobile money phenomena.
- Anything that is moving money around can act as a bank.
It doesn't matter whether the money you are moving
is created by central banks, by commercial banks,
or by mobile phone companies.
As long as somebody's using it for transactions,
then it's money.
In Africa, access to bank accounts
doesn't mean access to a bank account.
It means really, access to mobile money.
It actually started with people
sending themselves airtime.
And then the company looked at it and said,
"Okay, if people are sending figures
to credit their phones with talk time,
can't we do something more?"
When digital payments came in,
people saw an opportunity there,
where they would reduce their costs even lower.
And we now started the revolution of digital lending
and microfinance for profit.
- [Luke] Mobile money evolved beyond a place
to just send and store money.
It became a gateway to swift digital credit,
providing loans at an unprecedented pace.
- Today I was looking at credit card debt in the US,
it's just about a trillion dollars.
And the average interest rate on that debt is 24.6%,
which is very expensive.
Why is somebody not thinking,
"I can disrupt that credit card business
by coming in via the mobile money business."
The channel cost to reach all these people
is cheaper than a credit card.
With all the hype around these fast,
instant digital loans,
I had to find someone who was using them
on a daily basis to survive.
So most people in this market
would have a digital loan of some kind?
[Anne] Yeah, yes, they would.
- And how many different loans do you have right now?
I have like four different loans.
- Four different loans? - Yes.
If you go to the bank, you're asked to give security.
But with the mobile apps,
it is as easy as just going to the phone
and you get it immediately.
It's less than 30 seconds.
We've seen quite a number of fintechs
that have come into the market and they say,
"Look, we don't require any bureau data
to assess the individual's credibility.
We'll use other sophisticated forms of data
that they're able to get from their phones,
so they're able to scrape data from their phones,
get SMSes to be able
to understand their transaction histories,
and use that as part of their risk modeling
for that particular individual.
Before mobile money,
you would go to a microfinance institution,
and you'd ask for a loan.
By the time you get that loan a week later, two weeks later,
a month later, your needs have changed.
The issue was access.
These guys filled a very important gap.
Nobody will lend to that guy
sitting outside on the streets.
Not even you. Not even me.
Why? Because you had no data.
Mobile money changed all that.
As we are riding our own bike.
For others, the bike is owned by a boss.
He gave me this bike and now I have to pay.
So now I need to save money so that I can pay the loan.
And me to save as a person, it's not easy.
To benefit in the app, you need to ride more,
but on the apps, they're the ones that give you customers.
When you take a customer, there are two ways of paying you.
There is what we call a cashless and the cash.
Others, they're refusing cashless,
because they'll not get that money from the app.
That money,
they'll keep on chopping it until it got finished,
so it's not easy to grow it.
- [Luke] All of these riders are taking out rapid loans
from motorbike businesses.
Yet here I am with 10 of them, with no demand for rides.
People are borrowing for businesses with no customer base.
How is this beneficial?
So how many more fishermen
are looking to lease boat engines with this model?
(speaking foreign language)
- This new technology is rewriting the rules of microfinance
and not necessarily with the highest levels of regulation.
We've made this so incredibly easy,
that is what is absolutely terrifying.
- The really rich people in Silicon Valley,
what are their incentives?
What do they want? 'Cause they're not altruistic.
And it's those kind of questions that you need to be asking.
Is it safe to have a very powerful company,
or a very powerful individual controlling access
to funds for an entire community?
- [Luke] When I started this investigation,
I was a big believer in how financial technology
could supercharge microloans for the unbanked.
And while I believe the founders and CEOs of these companies
have their hearts in the right place,
my perspective started to shift
when I did a follow-up visit with Anne two years later.
- Life has not been easy from the last time
we saw each other,
because I take the digital loans to be able to buy products
and also, I sell the products
to be able to repay for the loans.
I'm fascinated because here,
you say you can get loans in seconds,
where in North America, you can't do that.
You look at a country like ours, Kenya,
currently even getting opportunities to work.
I'm a graduate, by the way. I have a degree.
But getting a job is hard.
I have looked for jobs everywhere.
I have applied over thousands and thousands
of job opportunities.
But getting opportunity to get a job is not easy.
There is this romanticized idea
that this abundance of credits
will lead to some sort of economic development.
But not everyone is really an entrepreneur.
And when you actually sit down
with some of these entrepreneurs,
what they all generally say is,
what I would really like is a job, but there aren't any.
So that's why I've come up with this idea
to become a sandwich maker.
It's not that they had this vocation
to become a sandwich maker.
They were kind of forced into it
for lack of any alternative.
Most people who take up these loans
are low income earners and the middle class.
For the low income earners, I sympathize with them,
because the first time when you take up a loan,
probably you have an urgency to sort out something.
But then again, it's like cocaine, you get addicted.
You keep on borrowing in as much as you had the thought
of paying and not taking up a loan.
That ease of access to credit
just makes you to want to take them up
more and more and more and more and more,
over and over and over again.
Interest rates for one particular lending app,
if you accumulate it for one year, it comes to almost 200%.
- We talked some time back and you promised to pay 10,000.
It's needed by the end of this week.
No, we can't wait until the end of March.
Compare credit to morphine.
We know that morphine
can be an extremely dangerous, fatal drug.
And it has to be used in extremely isolated cases,
administered by qualified people for very specific purposes
in small doses for certain people,
for short periods of time.
Now, the fact that morphine can just as equally kill someone
does not necessarily mean
that we should ban morphine altogether,
but nor does it mean that we should be handing it out
on street corners,
or at the touch of a button on a telephone.
Now why do we consider credit to be any different?
Credit can have catastrophic effects on individuals
and families and can bring entire economies to their knees.
And yet we keep on handing it out,
as though it was a lollipop on a street corner.
Anyone can get hold of these loans
without necessarily understanding the implications
of getting indebted,
how that's going to come back and haunt them in the future.
So we just spent two days with Anne,
and she's been telling me about these fast digital loans.
And while we're driving home, the cameras are off,
and she gets a phone call.
And I had to capture what happened next on my phone.
(speaking foreign language)
Oh my god, this is so funny,
because we are filming the same thing.
And then today, they've just decided to call me
to ask me why I've not been able
to pay back the mobile loan,
the mobile loan that I owe them.
So she's asking me why have I not been able to pay.
The last time we talked,
I was supposed to pay by a certain time.
Why have I not been able to pay?
And then I told her,
it's because the business I was doing that time collapsed.
So that's why I've not been able to pay back.
- Central bank governor said he was concerned about
the digital lenders who are like loan sharks on steroids.
Some of them have very bad practices
of getting into the borrower's contacts.
They're going to shame you in front of your family.
And culturally, the people in Africa,
they really despise that.
They tell you you would better take away a car,
or you better take away a house,
but don't injure my ego by telling me I cannot pay a loan.
Some people have actually become suicidal
just because they have failed to pay a loan,
sometimes of even as little as 100, $200.
- When I started using the apps to take loans,
I took from many apps, many and many.
So I ended up, at some point, I was not able to pay.
And then they started calling from one number to another.
I don't know if they hacked my phone,
or where they got my contact.
So I was tied in a corner
because I was not picking the calls,
and they keep on calling, calling,
until they call my pastor, and he was like,
"Oh, sister Felisters."
He called me and he told me,
"My sister, did you take loan from this app?"
I told him, "Yes, I took."
They called me, "Go and pay that loan."
I told him, "I don't have money."
He say, "Okay, how much?" I told him, "3,150."
He told me, "Okay, take this money, go and pay.
And don't take loans again."
I still went back and took loan again.
[Luke] Why?
Because I need the money!
We need the money, we need money to move.
I told him, of course, I cannot lie.
I told him I took another one,
and another one, and another one.
The more you borrow,
the more your credit amount goes higher.
So I'm just going to move round and round and round.
But the repercussion is, if I find myself whereby, look,
my salary is 30,000 Kenyan shillings,
and then I'm at a place whereby
I've borrowed 50,000 Kenyan shillings,
or 70,000 Kenyan shillings.
I'm looking at somebody's going to come after me,
because of 50,000 Kenyan shillings.
I can't manage. The next thing that I'll do?
I'll drop the SIM card, go buy another SIM card,
it's just 50 Kenyan shillings,
and then download my contacts from Google.
Hey, this is my new line, reach me on this line.
So with the hope that probably they'll never come after me.
Some people throw away their SIM cards.
But me, I chose not to throw it away.
Because it means to me
I'm running away from my responsibility.
The only medicine to clear this sickness is paying the debt
because now I'm a slave to debts.
I'm a slave to the apps.
What's your plan?
- Just to work more hard and pay off the debt.
The moment you give someone a loan,
and they owe you money, you essentially own them.
We've got hundreds of millions of people,
furiously working in their microenterprises.
In the name of financial inclusion,
we can tap all that surplus labor that generates wealth.
And that wealth is repaid to us via interest.
It's essentially nothing more
than the traditional 17th century slavery model,
but without the need to actually move the slaves from Africa
and Latin America, wherever,
to the so-called developed countries.
We've just essentially cut out that stage.
It's frustrating, to be honest.
Because it's like they make money off of me,
while in real sense, I don't benefit as much as I should be.
They increase the interest rates,
because they know that by the end of the day,
we will still need the money.
So they continue being rich, while we continue struggling.
- Think about digital finance, fintech revolution,
all of that stuff is actually borrowing on
this history of ROSCAs, co-operatives, SACCOs,
except the very foundation of ROSCAs
is this concept of social provisioning.
And so ROSCA members see that not only are they helping
their own livelihoods advance,
but the money that they pull in is actually shared out.
And there's this notion that profits
would go to some anonymous figure, some capitalist tycoon,
is really a foreign concept to them.
(ambient music)
[Luke] To summarize,
mobile money revolutionized the very concept
of banking in Africa,
and expanded access to credit for millions.
But influenced by profit-driven motives
and tech-driven data,
it further exposed the dark side of microfinance.
In a world that hopes to move towards
an era of open banking,
is there a way to reclaim the technology behind mobile money
to empower people again?
He can be able to send and receive money
through mobile money using USSD.
They already know that.
But now if you go a step further,
and show them that there is this thing called Bitcoin,
it's better than the fiat standard.
And then you show them you can be able to send Bitcoin,
receive it, or even make a purchase
just as easy as you're using fiat,
it totally makes sense to them.
And they love the ease of use.
So I'm talking with Master Guantai,
and he tells me about his friend in South Africa
who has invented a way to move Bitcoin
on the same technology as mobile money.
I had to find this guy.
Internet penetration is not that high
across the African continent, right?
So we needed a way for Bitcoin transactions
to be done without the hard requirement
of having an Internet-connected device.
Think about it like SMS, right?
Instead of sending an SMS to somebody,
you dial into a number.
It's almost like you are visiting a website,
where the only interface is text,
but you have to go back to the future, right?
So as much as it's outdated, a lot of people still use it.
Ultimately, as long as a Bitcoin transaction went through,
you shouldn't care too much whether it was USSD,
or whether it was via an app.
It is no other option.
Because it's either that,
or you continue being in the system
that is already not working in your favor,
like at all, like right now.
You just want Kenyan citizens' data,
and you're not interested in the core business
of mobile money lending.
And when you get this data, who do you give it to?
And what are the implications
of you stealing this data on me as a Kenyan citizen?
Having the ability to use a money
that your government doesn't control is quite important.
Bitcoin would be the only form of money
that Africans get to adopt by their own volition.
- I really didn't want to go down the Bitcoin,
cryptocurrency rabbit hole in this one.
But I would be doing this project and investigation
a massive disservice if I didn't follow the story.
So that's what we did.
Kgothatso is using the technology behind mobile money
to give power back to the people.
In the cryptocurrency landscape, Bitcoin is beaming,
as it moves through Africa via USSD.
The mobile money technology,
driven by passionate innovators and believers
in what could be.
What skepticism remains about Bitcoin
are largely due to how it's created
and its limitations on widespread adoption.
(gentle music)
This is when I had to call a friend and lifeline, Erik,
who was also raised in Africa.
He's highly respected when it comes
to bringing Africa online, even before stars and satellites.
Now I find him in the lush jungles of Kenya and Malawi,
where he builds sustainable Bitcoin mines.
- Should I just start like you just walked in,
and I was talking about the other stuff?
- [Luke] Yeah, like I bugged you like this, yeah.
Yeah, so let me start back here then.
Okay, cool.
So do you have audio going?
- Yeah. - We're good?
Yeah, okay. So right back here is what we have.
So this is where we repair old miners.
So these are like Bitmain S17s,
which are like really, really crappy machines,
but they're very cheap back in the day.
So we used those to test out a bunch of stuff,
and now we're just trying to keep 'em alive.
I didn't think I'd actually see,
ever get to see like a Bitcoin miner.
Well, let me at least show you
what a better one looks like.
This is like the really crappy version.
These ones stand up to the environment of Africa
better than the other manufacturers'.
So they can deal with like higher temperatures.
They can take more bugs crawling into them
and still stay alive.
- [Luke] How many Bitcoins would one of these produce
over this lifetime, is a fair question?
They differ, right?
Like if you were to transfer that Bitcoin
into dollars immediately,
it'd probably be around 10 or $15 a day that they earn.
Cost of power is your biggest cost,
it's your biggest operational cost.
So you're trying to find the least expensive power,
and you're trying to keep the most efficient machines
in there and keep them alive as long as possible.
How we think of it is this.
So like, we wanna go to places have renewable energy,
the local community probably uses 40 to 60% of it.
And so we come in as a buyer of last resort,
wholesale buy the rest of their power.
And then in some locations, what that does too
is it also lowers the price of power
for everybody in the community.
Really the whole idea of Gridless
was instead of them dumping that electricity,
let's convert that electricity into money.
There's too much electricity being made,
versus how much is being demanded.
You have to dump the excess in here.
- And that's actually called, - And then they heat it...
- It's called the dump load. - Okay.
- So the excess electricity goes into heating that water
as a way of just doing something with it.
So what happens is the electricity
that would go to that dump load now comes in here.
We've had to create a more sophisticated system
for controlling our Bitcoin miners.
So in most mining situations, they just buy electricity,
they turn them on, and they run them all the time.
But because we are trying to only use electricity
that nobody else wants,
we have to monitor the grid constantly.
- Bitcoin mining solves a very specific problem
for energy generators.
Somebody like us, who are coming and saying,
"Hey, we'll sign up and we'll use that excess power,
that stranded energy."
That means that the community gets the energy they need.
The energy provider has a customer,
so they're able to work sustainably for the first time ever.
And then we're able to make Bitcoin.
[Luke] Oh, thanks for this.
Wait, no, I've gotta do my symphony.
Like, you've got to hear.
All right, so, and I've talked to other Bitcoin miners.
Well, you control the symphony.
Well, I'm gonna turn it on,
so that you get this experience.
But like I've talked to other Bitcoin miners
and like, we have a love for this sound.
- You ready? - [Luke] Yes, please.
(miner humming)
And so during the day,
they're constantly going up and down.
(miner humming)
- I love it. - It's wild.
- Money's a means of exchange. It's a store of value.
It's a record of accounts.
Those are the things that money is, right?
So you could use anything for money, and we used to.
We used to have cowrie shells or gold or cash,
or now we use credit cards and debit cards, right?
We can use anything.
And so I think in this case,
there's no reason why a community who's coming from nothing,
whether they're in the US or they're in Africa,
couldn't be using Bitcoin as their medium of exchange,
as their store of value, and their record of account.
- The dollar replaced the British pound as the currency
for international trade, and it was backed by gold.
And so gold was the anchor for international trade.
And that was suspended in 1971 by President Nixon.
But it had become increasingly difficult to hold that peg,
because basically the world wanted more dollars
than the US having to hold the peg to gold
could realistically provide.
Its trade deficit was getting bigger and bigger and bigger.
It needed to devalue, and in the end,
the simplest thing was to abandon the gold standard.
There are a lot of people who would like to bring that back
because they see gold as providing an anchor
for the international system
that the dollar can't easily be.
They fear inflation arising from
out of control money creation by central banks,
and particularly by the Fed.
And they want to re-anchor the international system
to gold, really to stop governments doing that.
- Weird space where there's very rural Africa,
yet the very front edge of that technology for money.
The way that fiat currencies are currently managed
by their central banks, or by larger institutions globally,
means that inflation is bound to happen.
You have a decreasing value of your currency every year,
everywhere.
And what we do with Bitcoin mining
is create a new money that's harder.
It's a harder money than the dollar,
than the pound, or the Euro.
And it's a type of money that doesn't devalue
based on somebody else's whims.
It's not controlled by any central body.
It's immutable in code.
And because there's only a set amount
that will ever be created,
by its nature is non-inflationary.
And that provides a completely new way to think and use
and hold money that never could be done before.
I can move $100 to you, or billion dollars to you,
for the same price instantly.
What's exciting about that in Africa I think is this.
Is that we already have third rate money
as our ordinary everyday currencies.
Right.
- By digitizing them, we just have a faster way,
and easier way to use our really poor currencies.
Maybe we should be thinking about not just
how do we use bad money better,
but how do we actually have a better money
that can be used better by everyone?
- The US dollar is a competitor to Bitcoin,
and in many countries,
US dollar is a whole load more stable than Bitcoin
and a whole load more desirable than Bitcoin.
And maybe that could change. Maybe it could stabilize.
Stable enough to use on a day-to-day basis
as the main medium of exchange.
But like you said, people have got to want to use it,
and maybe there are communities
where they do want to use it, or maybe there aren't,
I don't know.
It's not impossible.
- [Luke] Creating Bitcoin to use as a store of value
or an asset is one thing.
But using it as a currency is a different story.
I'd heard whispers of surfer communities
experimenting with Bitcoin,
and how they're influencing more communities
to embrace it as a means of exchange.
I traveled from Cape Town to Mossel Bay,
to witness a community integrating Bitcoin
into their daily lives.
- What this project has revealed to me about myself
is I don't know when to stop.
I should have stopped many times, I think.
It's all very exciting now, but the preceding sort of nine,
10 years, was a very long, hard lonely struggle,
trying to keep a little insignificant
non-profit organization going.
- Well, the non-profit basically ran out of funds,
and it was either let everybody go,
and just give up 10 years of work,
or think completely out of the box.
We received a donation in Bitcoin,
but the trick was that do not change it back to fiat.
Do not go back to the broken system, use it.
It felt pretty hopeless.
In fact, I did actually give up in 2020.
I was like, "I'm done."
And then six months later, started the Bitcoin project.
- [Luke] Prior to diving into the world of Bitcoin,
Hermann and Evgenia had initiated a nonprofit,
using surfing as a tool for educating kids.
However, like many charitable endeavors, funds were scarce.
With this infusion of digital currency,
Hermann and Evgenia pivoted to educating young surfers
about the fundamentals of Bitcoin.
They're on a mission to educate local businesses
on how to embrace Bitcoin as their primary currency.
The key focus, how to use the service
that harnesses the USSD mobile money technology,
the brainchild of my new friend, KG.
The shop that we are going to now,
we struggled for a long time to get him on board.
I don't know how long. He was pretty keen.
And then he went to talk to his business partners
and they were like, "No, no, no, this thing is a scam."
And then six months later, he got robbed,
stole a bunch of cash from his shop
and he came back to the Tondo and he's like,
"Okay, so well tell me about that Bitcoin thing again."
Because they're all cash-based, right?
The shops here, and that's the security risk.
Bank account and card payments
can solve a large part of that problem,
'cause if they break into your shop,
they can't steal your money if you're taking card payments
and you've got a bank account, but that's expensive, right?
[Luke] Right.
- [Hermann] With Bitcoin, you can do the same thing,
but for very low cost.
Because if they break into your shop,
they can't steal your Bitcoin.
First of all, how much do we owe you?
- [Shopkeeper] 32. - 32 rand, okay.
- So I press send, - [Kgothatso] And then.
[Luke] There's a barcode. This barcode.
Yes, yes.
And then just click here,
and then can show you send option.
Send.
(phone chiming) Boom.
- [Luke] Wow. - [Kgothatso] It's in.
- So really this is a pretty simple process
in comparison to even what a mobile body wallet would be.
So the surfing thing kind of provides this environment
within which the older generation
can teach the younger generation something constructive.
And for doing that they earn a salary,
which is derived from donations.
And those donations now come in the form of Bitcoin.
- Kids with whom we work that come from the township,
financial literacy is definitely
not part of the school curriculum.
And now all of a sudden,
you're giving them this new piece of technology,
so all of a sudden they kind of have to learn
and educate themselves, what it is.
All these questions that like,
were not on the radar at all.
- We have this big digital economy out there,
and communities that are only using local cash
are shut out of it.
And that doesn't help them grow.
They need to be part of this global digital economy.
And one way of doing that is to enable them
to use a digital currency to make the best use of it.
I mean,
Bitcoin is something that takes time to understand.
It all comes down to long-term commitment,
whether that's learning to surf,
or whether that's saving for the future,
using the best form of money that's ever been created.
What I'd really like is for these kids
to help get the future generation there.
Whether they win the next event or not,
or whether they accomplished whatever.
I mean, I think they've already accomplished
an incredible amount considering where they come from,
and what they had to go through to get there.
Quite something to witness.
- [Luke] Regardless of your stance on Bitcoin,
one thing is for certain.
There are little hubs around the world
where the whole community is buying into Bitcoin.
Bitcoin is creating community.
And these communities draw inspiration from one another,
sharing ideas and birthing new Bitcoin initiatives.
I could see this network organism replicating
right in front of my eyes,
as this particular project led me to another nearby venture
called the Bitcoin Ubuntu.
- I knew I had to do something Bitcoin-related,
but I had no idea what, until I saw Hermann,
Bitcoin Ekasi follow the Bitcoin Beach model successfully.
Those projects led the way really for projects like mine,
to learn from their experience
and adapt to our own community and our own needs.
[Luke] Just like Hermann used surfing,
Glenn used soccer as the catalyst for Bitcoin integration.
- When I started looking at doing something similar,
I discovered documents existed, published by Bitcoin Beach,
outlining exactly how they'd gone about achieving
what they'd achieved.
I came to the discovery that many people
had already discovered this documents,
and had exactly the same idea.
And to my surprise, these communities
had already started popping up everywhere.
There are literally hundreds of them now.
Little fires popping up all over the the planet.
- If you had a community that ran entirely on Bitcoin,
right, that would be fine,
as long as everything that anybody ever wanted
was fully obtainable within that community.
But if they needed anything from outside,
they'd have to exchange it for something else.
And that's where the price and stability of Bitcoin
comes into play. (ambient music)
(ambient music continues)
I think Bitcoin is a solution
waiting for the problem to come full circle.
'Cause the problem is not yet full circle.
All the symptoms there, all the indications are there,
but it's not as if it's gone to the point
where it's reached its ultimate conclusion,
where we go full Zimbabwe, but not in Zimbabwe, all over.
[Luke] Zimbabwe,
a country grappling with economic turmoil,
impacted by hyperinflation, currency collapse,
and political unrest, holds a special place in my heart.
It was my first stop in Africa as a young boy.
Standing at the top of one of the city's highest
off-limits vantage points, it felt like a step back in time.
Not much had changed.
And yet, Zimbabwe provided the perfect backdrop
to witness a resilient people
facing never-ending economic challenges,
circumstances that some fear
might mirror the future of the West.
- Zimbabwe's been a great example of what is going to happen
I think, in the rest of the world.
Principally in terms of currency,
and what currency is, and currency change.
Zimbabwe is in a very complex position
when it comes to our monetary system.
We have what you would call the RTGS,
which is the money that's in the bank,
and that you can only move through banks, right?
From bank to bank.
And then you have mobile money, NetOne money,
OneMoney, we have EcoCash,
we have all these different mobile money networks.
And then we have the USD,
but there's two kinds of USDs, right?
So you have USD cash, then you have USD Nostro,
which is USD that's in a bank, yeah.
And it's kind of holds a different value to USD that is,
it's the same currency, but they move different.
And then you have the Zim dollar cash.
Then there's what you call bond notes.
But bond notes were actually phased out,
and we now have the official ZWL, the Zimbabwe currency.
We still have some bond notes still in circulation
that add to the actual Zimbabwe dollar,
but there's no more bond notes.
But because people were using bond notes for so long,
the Zimbabwe dollar is still called
(speaking foreign language)
- It's still called bond notes. - [Luke] I am so confused.
- Yeah, it is. (Aurra laughing)
So I went grocery shopping yesterday.
I think I spent $20 on $7 worth of goods,
and I got like $3 back in a bunch of different currencies.
So in order for a lot of Zimbabweans
to save on the cost of goods,
they use these black market forex exchange people.
I found a guy who's gonna meet me at three o'clock
and he's gonna gimme his bank card.
And I'm gonna go shopping on the bank rate.
And we're gonna work out an exchange between the two of us.
And this is how many Zimbabweans operate
on a grocery store level day to day,
to save money on the black market.
- Zimbabwe has spent a lot of time learning
how to live with collapsing currencies,
and the world is gonna be part of that lesson
going forwards into the future.
Most currencies have devalued significantly
in the past five to 10 years,
and that will continue for some time to come.
The collapses have only just started.
The whole meaning of money is gonna change.
Money's applicability is gonna change.
The value of money is gonna change.
How you use money is gonna change.
And all of those were lessons Zimbabwe learned.
The Zimbabweans learnt to be incredibly ingenious
in inventing solutions on how to get around a currency
that went from one to one to the US dollar to one to,
I think it was at the final end of the collapse,
it was many quadrillions to one to the US dollar.
[Luke] Zimbabwe's economic struggles
made me think about another potential economic storm
heading to the West.
And I started to rewind all the themes I've investigated,
and the people I visited.
And all things considered,
I still questioned how Africa could save the West.
But when I came to know a group of women
called the Firestarters,
and another group of women called the Banker Ladies,
my imposter syndrome and self-doubt vanished
because these African ideologies are already here.
They're already in the West.
- When Zimbabwe women get to a place, we find first of all,
people who look and sound like us.
And then once there's about three Zimbabwean women together,
we start to look at collective savings.
In Zimbabwe, it's called mukando,
which is a Shona word for "to pool,
or to throw into the middle".
I realized how much money was circulating.
The remittances were close to $2 billion.
I desired to have us move some of that money to investment.
- [Luke] Remittances are funds sent by migrant workers
to their families abroad.
And it typically involves transfer fees,
exchange rate margins, and recipient charges,
rendering sending money home
a lucrative billion-dollar industry.
And this led to Sharon and the Firestarters
expanding upon the concept of a SACCO,
reimagining a new model that could benefit the diaspora
and future generations.
These women are pooling their resources
to invest in properties,
demonstrating a simple way to build wealth together.
- What she had done was a magnificent innovation
on a lending circle model,
where instead of women coming together
to put all their resources in the middle,
and then whoever needs it takes it and repays it,
and they take turns, she innovated to say,
instead of us lending the money to each other,
let's put it into the middle,
and purchase real estate together.
And she was able to do it not just with one group of women,
but with two groups of women, and secure two properties.
- Wherever there are immigrants immigrating
from various parts of the world,
they are bringing their ROSCA systems with them.
So in all of our major cities,
we're finding these ROSCA systems.
For almost a decade, I've been working with these women
who are trying to organize themselves
as an education advocacy council
that is working on behalf of ROSCA users.
- If something is practiced that universally,
we have to make a case.
Where I go, I'm bringing the Banker Lady
and the ROSCA flag we know.
I know people are asking questions,
and they wanna know what is this, and how does it work,
and how do I get involved?
So it's not just for women,
it's not just for people who are unbanked or underbanked,
but everyone actually participates.
There's no community that you mention it
to that's racialized, that doesn't have a name for ROSCA.
Everybody's doing it like covertly, like almost afraid.
- [Luke] I was excited about this innovation.
But not everyone shared my enthusiasm.
- I had no idea of the hurdles that lay ahead.
I naturally went to a Black male lawyer who said this,
"Oh, my mother is Jamaican, and she does this partner.
It's illegal. You can't do that here in Canada."
- [Luke] I was humbled to witness the Firestarters
receive the keys to their newest property.
But I couldn't shake the concern
that barriers would persist,
preventing the West from truly acknowledging the system.
- The issue is that there's no recognition of these systems.
People actually think that what they're doing is illegal,
when they're actually helping one another
through financial services.
It was scary.
I also felt scared, not just for myself.
When you are a leader in the community,
and you've been leading people and to think,
how do you go back and tell them that,
"Guys, this whole thing that you've been doing is illegal."
If police or any other authority,
learns about these collections,
there is a law called the Civil Remedies Act,
which gives authorities the right to confiscate money
where the origins are unlawful.
So if there's any question about
how these monies were accumulated, the police go in,
and raid their apartments and confiscate those goods.
These women have no recourse to any kind of legal solution.
And so what you have right now is this legislation
that exists that may have been there at a point in history
for a certain reason, but now these hardworking,
cooperative women are being penalized for doing self-help
on their own terms.
- That they were able to do that together, and over time,
be able to purchase a property was very exciting
and not scalable because it was labor-intensive.
And the structure, the corporate structure that was required
for all of that to happen was onerous.
There's no legal scalable framework currently
that we've been able to determine
that would allow women to pool their resources
into the purchasing of real estate.
They needed an exemption to be able to do
even what they did do around friends and family,
that allowed them to have 50 people
owning a piece of property.
But that exemption is not valid for sure for scaling,
because most people
don't have more than five friends or family.
So even 50 is a stretch.
And certainly scaling it beyond that would not work
under the exemption of securities law.
Unless I push through the barriers,
it will remain like that.
And the situation won't change for my daughter,
and for her children too.
And if we don't say something, if we don't speak up,
the status quo will be maintained.
So we have to make noise,
because I know that this is something that works.
- And so the vision was if this could be done for 100 women,
what if it could be done for 10,000 women?
What if it could be done for 100,000 women?
We're saying,
"Come learn and see how this thing
that Africans used to do zillions of years before,
is not just informal or less done, but it is legitimate.
It can stand side by side with a formal system."
One of the key things
that has come out of this part of the world
is that we have redefined what banking is.
For far too long, banking has been about banks.
In Africa, that story has been tossed away completely.
- But then you get thrown in as an immigrant
into a new system.
We forget what we had.
And all of a sudden we're assuming that everything
that we're being fed is the right thing, right?
How is it the right thing,
and then everything is so messed up?
- We've got the experience of dealing with the level
of volatility that is only now appearing over there.
We in the West might think,
"Ah! Our governments are benign.
It's never gonna shut anybody out of the financial system.
Nobody's going to be denied access to the means to live."
I look around the world and think,
"I am not so sure about that."
You're never gonna find a situation
where our problems are solved by benevolent dictators,
benevolent politicians.
But yet people trust in that system.
People wanna vote for popular politicians.
People want a charismatic leader
to come and solve all our issues for us.
No, that's not gonna happen.
You've gotta take responsibility in your own hands.
Scale down.
You gotta make decisions as a family, as a community,
and take responsibility for those decisions.
And people don't like that.
- These people living in developing countries,
they don't wait for their government to make a plan.
They come up with a plan, or community come up with a plan.
And that is what Westerners are not usually good at.
- So much of our world is literally on fire.
And here we have these credible, ancestral tools
of how to collect money, and we're not even using them.
- You need an outsider thing to come in as everything breaks
to try and fix it.
We look at the banking sector,
and we assume that there is no alternative.
It's too easy to forget the first really big banks
were co-operatives.
Many of these institutions operated perfectly well
without causing financial crisis.
And because it's a co-operative,
the borrowers are the owners, in a sense.
It's owned collectively by the community.
So there is no temptation,
there is no need to go and exploit your borrowers,
because you are exploiting yourself.
- Technology, knowledge-sharing,
shouldn't be from the global north to the south.
There's something that we have to teach the global north
and then iterate,
use technology to improve some of those things.
And it can teach the formal system
one or two things about Ubuntu.
- We can't run away again from here, like we did,
we ran away from Zimbabwe.
We can't. We're here to stay.
So the system has to accept us.
And we'll make sure that we force the system to accept us.
(upbeat music)
(upbeat music continues)
- And it's about time that the government in South Africa
recognizes the stokvel.
Yet while they promoting them,
the net worth of the stokvels is like 22 billion.
[Speaker 2] Mmm.
According to the latest,
or current figures that we have,
there's about 55 billion rand that circulates
within the South African economy saved by the stokvels.
- [Speaker 3] 55 billion rand. - 55 billion rand.
This is the money that is being saved,
or collected by stokvels annually.
A rotational stokvel as well.
Next month we buy for you, it gets installed,
and then we go to you, and then,
(speaking foreign language)
With the high inflation rate and this and this,
people can't afford things these days,
but they can do a lot of things with a stokvel.
I think we are done, Luke.
(women laughing)
(upbeat music)
(upbeat music continues)