In Africa, Money Is Just a Phone Call Away

Tyler Cowen explains a currency innovation in Africa:

I heard a report that in northern Tanzania they are using cell phone credits in lieu of traditional money.  If you want to pay for something, just make a call to the provider and transfer cell phone credits to the other trader's account.  Why should those credits be any less liquid than currency?  They are easier to store and transfer and just about everybody uses them.

Monetary economics in Africa is very, very difficult.  It must start with the presumption that money is the asset with the highest carrying costs, if only because your relatives find it so easy to take away from you.

I recently heard that one of the difficulties in capital-formation in Africa is that culturally anytime anyone makes a significant amount of money, all of their relatives will show up expecting to get some of it.  In a subsistence, agrarian world this makes some sense, but in a developing economy, it can wreck havoc.  It sounds like trading cell phone credits may be a work-around.