16 Jul 2017 - 23:18
South Africa’s white enclave eyes move to e-cash
Johannesburg: A whites-only enclave in South Africa has resisted the country’s multi-racial reality for more than two decades, even adopting its own paper money in its bid to promote self-sufficiency.
Now Orania, a town of 1,400 established during the dying years of apartheid and protected by the constitution, is looking to take its “ora” currency digital. Orania was created by Afrikaners on private land in 1991 ahead of the dawn of democracy and its residents are mostly white farmers or traders. The town maintains its unique racial makeup by vetting and interviewing prospective residents. If Orania’s audacious plan goes ahead as expected, the “e-ora” will enter the world of virtual currencies—although it’s still a far cry from the likes of cyber-money giant Bitcoin. Strictly speaking the ora is not a full currency, but serves as a token or voucher.
It was introduced in 2004 to promote local spending, with users enjoying discounts when they use the local coupons. Although Orania does not insist on payments in ora, the town profits from every sale of its currency by holding the deposited rands in an interest-bearing account. The ora is not officially sanctioned by the South African Reserve Bank, but residents can currently exchange South African rands for physical ora at the town’s self-styled “central bank” at a rate of one-to-one.
By going electronic, Orania—where 97 percent of residents are white compared to just one in 10 nationwide—will take its first steps into the booming world of digital cash.
The market for virtual currencies is thought to be worth billions of dollars, but critics argue they help drug and arms dealers and people traffickers. “What we plan to do is to digitise the existing physical ora and replace it with an electronic one,” said Dawie Roodt, chief economist at the Efficient Group, a financial consultancy hoping to help the town reduce the transaction costs of the paper ora. “If you can reduce the cost of the transaction, you can boost economic activity quite substantially.”
The paper vouchers will continue to circulate alongside the cyber cash, but unlike the physical “banknotes”, the e-currency will have no expiry date.
“There are significant technological changes taking place in the financial space—like Bitcoin,” said Roodt.