African entrepreneur Mamadou Kwidjim Toure is launching a gold-backed cryptocurrency that he hopes will help even out the constantly fluctuating values of local African currencies and connect more Africans to global markets. He spoke with Tom Collins.
“I am because we are.” So goes the translation of ‘ubuntu’, a Bantu word which circulates in multiple African languages and describes the virtues of living and working together for the mutual benefit of humanity.
Using this lens, Mamadou Kwidjim Toure, Founder & CEO of Ubuntu Capital Group, via its subsidiary, The Ubuntu Investment Company (TUIC), has created a 100% gold-backed digital coin called GODL, which functions as a currency, to connect its users to the global economy while also operating as an investable asset.
Toure started the Ubuntu Group shortly after leaving his position as Managing Director of Global Growth Operations for General Electric, leading investments for the conglomerate in Africa. His new product has a variety of functions. One is as a gold-backed asset which will likely offer returns to its buyers as the commodity appreciates.
While most African local currencies have continuously depreciated, affecting the population’s purchasing power, gold has on average increased in value by 15% per annum since 1971, when US President Richard Nixon ended the greenback’s gold standard backing.
Toure states that by offering an easily accessible platform to digitally purchase gold he is democratising access to Africa’s vast but largely ‘hijacked’ mineral wealth.
“People say Africa is poor, but Africa happens to host the largest gold reserves on the planet – around 40%. So Africa is also wealthy in terms of mineral resources – now, what if we trade those mineral resources as a currency?” he tells African Banker on the phone.
“By tokenising gold, TUIC can democratise access to wealth creation via mobile phones by giving its customers in Africa and around the world access to more sophisticated wealth-creation tools and appreciating assets which have been historically barely accessible to those on a lower income.”
Beyond its properties as a savings instrument, GODL can be used globally as a currency for cross-border and international trade.
In Africa, the unbanked, 70% of the population, are de facto excluded from the global economy because it’s very difficult to transact internationally with their local currencies. Trading through an app and website, Toure says the “peer-to-peer” and “point-to-multipoint currency” will instantly connect the user with a borderless economy.
Compared to fiat currencies, whose values fluctuate according to imports and exports, GODL’s gold backing means the currency is especially stable, allowing its users to avoid the volatility associated with dollar to local currency transactions.
Toure claims that in the context of the African Continental Free Trade Area, GODL could offer a valuable alternative to accelerate and facilitate intra-African trade by avoiding exchange rate loss and currencies’ volatility.
GODL also uses blockchain technology for transparency, security and traceability of transactions. Thanks to the technology, GODL investors can track and trace their gold from the mine to the vault.
When asked how TUIC sources the gold to back GODL, Toure says that “GODL can be acquired through the purchase of Ubuntu Coin (UCoin); another TUIC product which gives the purchaser the possibility to buy gold at a discounted rate.”
The group uses the proceeds of UCoin sales to pre-finance the extraction of gold at artisanal mining sites across Africa in return for gold supply at a discounted market price. The gold secured is then tokenised into GODL and sold digitally to the market.
In return for their investment, UCoin owners can either opt to buy GODL at a discounted price or receive profit-sharing from the sales of GODL. The digital coin also acts as a currency and an asset in its own right. One UCoin gives the right to one share in the company.
Toure expects the number of users to reach up to one million by the end of 2020, growing to 10m in the next three. In 2020, he says he is looking to raise $100m in order to propel the coin into the market, having recently progressed past the minimum viable product stage (MVP).
Sourcing gold ethically
Toure’s revenue model is based on the sale of gold, sourced ethically at a discount, and the proceeds from money-transfer transaction fees on the platform. The gold is currently being responsibly sourced from across Africa and stored in secure locations as bullion.
“Our team is securing gold from suppliers on the African continent and is currently negotiating key frameworks with junior gold mining companies as well as African governments to help pre-finance equipment and technical assistance for artisanal gold miners while supporting sustainable mining extraction processes in exchange for the regular supply of discounted gold,” says Toure.
“In the long run we will also expand our gold extraction strategy to other regions around the globe. TUIC is currently finalising negotiations to source gold from mines in North America.”
Internet of money
TUIC was a finalist at the 2018 African Banker Awards in the Innovation in Banking section. Toure believes Africa can use these new currencies and technologies to leapfrog much of the rest of the world.
“Historically, the continent was a cash economy and the low penetration of the banking sector forced Africans to create mobile money,” he says. “Now digital currencies are going to be a great opportunity, to not only to formalise the economy but to access the global economy while attracting local and global investors.”
Toure views this innovative way of raising capital directly through the consumer mobile phone as a unique opportunity to propel the continent into the Fourth Industrial Revolution and to digitalise Africa’s informal economy, which represents more than 40% of its GDP.
He also views it as a means to decentralise access to finance and offer a disruptive platform enabling African businesses (in this case junior mining companies) to fuel their growth by mobilising both local and global capital.
The internet of money, or web 3.0, Toure concludes, is the third revolution which the digital age is about to welcome. First the internet was used as a highway of information, then for goods and services, in the form of ecommerce, and now it will be used for decentralised money.
“Money will be able to flow independently between parties on a peer to peer basis, and [the internet will] open multiple highways for access to finance,” he insists. “That is a major shift.”