INTERNATIONAL - Facebook's new cryptocurrency system Libra will be counting on continued explosive growth from emerging markets and especially India to succeed, say strategists with Jefferies Financial Group.
While Facebook’s user growth in North America and Europe has slowed, the social media giant’s base in India has doubled since 2015 to about 310 million people - and is forecast to balloon to about 440 million by 2023, noted a June 19 report from strategists led by Sean Darby. “It’s the company’s growth in India that’s eye-catching,” Darby said in the report.
“The fact that developed markets may have become ‘saturated’ has prompted Facebook to look at emerging markets where it can mix payments and advertising”, as personified by Tencent Holdings’s social platform WeChat in China. Facebook is taking advantage of low penetration rates in emerging markets, where it expects 90percent of its growth to come from South-East Asia, the Middle East, North Africa and Latin America, he said.
The Libra crypto project, which may launch as soon as next year, includes payment giants Visa, Mastercard and PayPal Holdings as partners. It’s designed as a stablecoin, a digital asset backed by low-volatility securities to minimise price fluctuations, and presents an opportunity for Facebook to generate new sources of revenue from its massive existing customer base. But it’s already facing scepticism and criticism from politicians raising privacy and security concerns.