African Central Banks Ready to Roll Out Digital Currency

It would appear that the appetite for Digital Currency among Central Banks in Africa is getting bigger and bigger. In a recent survey report by the Bank for International Settlements (BIS) published in November 2022, nineteen African Central Banks expressed active interest in launching their money in digital format.

The Central Bank Digital Currency (CBDC) can be used as legal tender alongside bank notes and coins. More importantly perhaps, it will greatly facilitate cross-border transactions. The main motivation to issue #CBDC is to achieve greater payment efficiency and easier financial monitoring.

The Central Bank Digital Currency presents certain features and advantages such as:

  1. Ensure monetary sovereignty
  2. Reduce costs of cross-border payments
  3. Improve resilience and security of payment systems
  4. Promote Digital Economy
  5. Enhance Financial Inclusion
  6. Eliminate printing and safekeeping costs of paper money
  7. Easier monitoring of financial transactions

Digital Currency has the potential to allow Central Banks to reinforce their monetary authority as the sole legal issuer and tracker of national currencies. Compared to Cryptocurrencies such as Bitcoin which are based on #blockchain distributed architecture without centralized supervision, the CBDC will allow seamless and efficient cross-border payments while reinforcing currency sovereignty.

In 2021, Nigeria was the first country in Africa to launch its #DigitalCurrency, codenamed eNaira, and Ghana quickly followed suit with eCedi. It is reported that South Africa has completed Phase 2 of the CBDC implementation under the Khokha project.

In addition, Botswana, Eswatini, Kenya, Madagascar, Mauritius, Morocco, Namibia, Rwanda, Tanzania, Tunisia, Uganda, Zambia, and Zimbabwe are all currently at various stages of CBDC deployment. Although Nigeria is the only African country to have rolled out a CBDC, the #MauritiusIFC is planning to do so soon in order to stay in the leadership pack when it comes to innovation and finance.