Tunisia is a pioneer in the digital currency field. In a world first, the country adopted a blockchain-backed electronic national currency (the e-Dinar plus) in 2015, through a partnership between La Poste Tunisienne (Tunisia’s national postal service), Swiss tech firm Monetas, and the Tunisian startup DigitUS. La Poste first introduced e-payment to the country in 2000, shortly after European banks began offering mobile banking, followed by mobile payment in 2009. In 2016, it began transitioning the existing 600,000 e-Dinar customers to the new, blockchain-backed e-Dinar plus system.
Through an Android application run by La Poste, Tunisians can use their smartphones to transfer money, pay for goods and services online and in person, send remittances, pay salaries and bills, and manage official government identification documents. La Poste is uniquely situated to advance this system as an authorized financial institution that is licensed by the national bank to issue this e-currency pegged to the national currency. While still in an early stage, the technological advances provided through this form of e-currency could bring big changes to Tunisia where, according to the World Bank’s financial index, only 27.4 percent of the population has formal banking relationships. Globally, mobile money has been a key factor in increasing financial inclusion and allows people to build savings, plan for the feature, and mitigate the effects of unexpected costs.
Tunisians today face several major financial hurdles that the new e-Dinar plus could help address. The Tunisian dinar is a non-convertible currency, meaning it is illegal for individuals to take dinars in or out of the country. Tunisian credit cards cannot be used on international e-commerce sites, such as Amazon. Additionally, the domestic e-commerce market is underdeveloped. Tunisians are not provided with incentives to have a bank account, should they have access to one. However, widespread use of the e-Dinar could create a virtuous cycle, encouraging local entrepreneurs to develop domestic e-commerce and encouraging Tunisians to enter the e-Dinar market.
The e-Dinar system also removes prohibitively expensive transaction costs found in some other e-currency markets, capping transaction fees at 1 Dinar, a cost that is paid by merchants in most e-Dinar transfers. And the current platform is interoperable with existing e-payment services such as public utilities, telecommunications companies, and Tunisian businesses.
Digital currency has altered the financial landscape of the developing world, allowing access to affordable service to hundreds of millions across the globe. Advances in mobile money have proved revolutionary, Kenya’s M-Pesa providing one of the greatest examples of the power of this new technology. Since its launch in 2007, the M-Pesa has grown to provide services to over 25 million Kenyans and roughly 25 percent of the country’s GNP passes through its system. It has been credited with raising 2 percent of Kenyan households from extreme poverty and increasing incomes between 5 and 30 percent among users.
In 2015, Ecuador rolled out a digital currency in part to provide savings for the government, which previously spent $3 million a year to exchange old, unusable bills for new ones. The digital currency is tied to the U.S. dollar (Ecuador’s official currency) and run by the government. It was adopted by taxis and allows citizens to pay their taxes electronically as well as send money between individuals. And in Sweden, where the retail sector has seen a dramatic drop in cash payments (from 40 percent in 2010 to 15 percent in 2016), the central bank is investigating the feasibility of issuing an e-kroner.
Unlike other digital currencies, the e-Dinar Wallet uses a “blockchain inspired transaction protocol.” This new system will allow interoperability between various telecom providers by providing a single shared ledger system. This is a key development from other systems where customers from one telecom provider cannot pay or receive payments from a customer with another provider and will further cut transaction costs. The system itself eliminates the need for trust between actors in any financial interaction and lowers the barriers to exchange. One of the founders of DigitUS, Walid Driss, explains that the technology behind the e-Dinar is efficient, cost effective, and removes third parties and intermediaries from financial and administrative transactions.
In order for the e-Dinar to have the positive impacts described above, it must be adopted by a large number of Tunisians and overcome some regulatory and political obstacles. According to a March 2017 presentation by Moez Chakchouk, the CEO of La Poste, 700,000 Tunisians currently use the e-Dinar Wallet with access to prepaid debit cards and a virtual account. That is a good start, but represents only a small percentage of the 11.5 million Tunisian population. La Poste has the potential to reach Tunisians across the country through its 1,200 branches across Tunisia. And accounts at La Poste are accessible to all Tunisians—regardless of their economic situation. But so far it has not reached the large numbers it needs to represent a sea change in the country.
But the biggest challenge to further utilizing digital currency comes from concerns over money laundering and terror financing. While government officials and the central bank are rightly concerned that digital transactions could open doors that bad actors could exploit, ironically some of the government’s efforts at fighting corruption through developing provisions to counter money laundering, might have the effect of stunting the use of digital currency, which itself can be used to fight corruption. The nature of the electronic currency creates a record, an associate account, or phone number, and is vastly more traceable than cash transfers. It also provides a level of transparency that is missing in cash, or even traditional non-digital payment processes.
Additionally, there seems to be less political will today than in the past to move Tunisia toward a digital future. The previous minister of information technology and communication, Noomane Fehri, developed the Tunisia Digital 2020 plan and was of a similar mind as Moez Chakchouk. Both men sought innovative technology-based solutions for Tunisia’s economic and social problems. Today, however, the administration is largely without a vocal champion of the e-Dinar or similar technological tools.