When one thinks about overseas opportunities for nascent cryptocurrency fintech companies, Libya isn’t exactly the first country that comes to mind.
For example, here’s what the Canadian government advises about travelling to Libya:
Avoid all travel to Libya due to persistent insecurity throughout the country, including sustained armed conflict, a high risk of terrorist attacks, an unpredictable political situation and a high crime rate. Given the recent deterioration in the security situation near Tripoli, you should leave by commercial means as soon as it’s safe to do so.
That’s why the idea of Fintech Select (FTEC.V), a fintech company dealing in pre-paid cards dealing in cryptocurrency, doing business in Libya seems like a curious bet.
Their total portfolio includes prepaid cards, and e-wallet services along with bill, mobile, on-line and international payments.
The company and their JV partner Raseed are providing a pre-paid closed-loop card to a regional Libyan bank. It’ll serve 20,000 clients at almost 100 point-of-sale (PoS) locations. The closed-loop cards and a set of PoS terminals have already been shipped. Both companies have been putting their system through an ongoing battery of tests, and expect to go live when finished.
Raseed deals in financial payment services, serving government, local banks and telecom companies and aims to help modernize the country’s financial services and telecom sectors by bringing such up to international standards. In Libya.
Here’s an image from their corporate blog.
A full third of the population of Libya lives in poverty, so who is going to be adopting these cards?
The company does have revenue, though, strangely enough. Their call centre revenue has increased over the last two years, having grown more than 68% in 2018 and is expected to grow by another 27% by 2019.
The risk section of their MD&A says quite a bit about this company, both in what it does and doesn’t say:
The company was served with a Statement of Claim filed in the Ontario Superior Court for $400K because of a “shortfall of a secured cash pledge, as per the Special Account Agreement.” Basically, the card didn’t have any money on it.
Technical glitch? Maybe.
Then again, this time swap out the province of Ontario for Alberta, and fast-forward to July of this year. One of the company’s subsidiaries were served with another Statement of Claim regarding the balance of funds on expired cards.
That’s two expensive glitches.
What the risk section doesn’t say, and what should be somewhat obvious, are the political and economic risks of dealing with the financial apparatus of a failed state. Especially regarding cards filled with money, which could be stolen, or maybe included in some variety of organized theft and end up in the hands of groups contrary to your business interests.
It’s not that Libya isn’t in need of foreign investment, but right now it’s a failed state with no infrastructure to speak of. Large swaths of it are also presently being used as a battleground between ISIS, ethnic groups and rival political factions, and a sudden infusion of cash from a bank taken as plunder by the enemy wouldn’t look good on FTEC’s bottom line, or yours for that matter.
—Joseph Morton