5 African Central Banks that Are Exploring Digital Currencies
Digital currency is a form of currency that is basically managed and accessible only in an electronic form. A report on the website of the International Monetary Fund shows that many Sub-Saharan African Central Banks are exploring the use of digital currency to improve their payment systems.
This comes on the back of Nigeria introducing the e-Naira in October 2021. Since its introduction, other African countries have started a pilot phase of a digital currency. Below are some African Central banks that are exploring digital currency.
1 . Firstly, CENTRAL BANK OF NIGERIA
Nigeria has the largest economy in Africa. It is also, the first to launch a digital currency, the e-Naira on the continent. According to leaders in Nigeria, the introduction of the e-Naira will boost the country’s GDP by $29 billion. The e-Naira is an electronic form of the local paper naira currency.
This electronic currency will not replace cash but will function as a safe means of payment.
2 . Secondly, SOUTH AFRICAN RESERVE BANKS
South Africa is in the pilot phase of a digital currency. The South African Reserve Bank is experimenting with the Central Bank Digital Currency (CBDC). This experiment is known as the Project KKhokha. In the experiment, two forms of tokenized money were created to allow for the payment of services. Currency can be used by financial institutions for interbank transfers only.
3 . Also, BANK OF GHANA
In September 2021, the Bank of Ghana rolled out the first of a three-pilot-phased nation digital currency. The digital currency was named e-cedi. According to the 1st Deputy governor of the Central bank, Dr. Maxwell Opoku-Afari: “Digital Currency is part of the central bank acknowledging the need for digital payment and digital delivery of financial services.
By this, the Bank of Ghana will provide a platform on which we can add more value to digital transactions.” The e-Cedi can be used by anyone that has a digital wallet app or a contactless smart card that can be used offline.
4 . Last but not least, BANK OF ZAMBIA
The bank of Zambia is in the research stage of considering a digital currency. The results of the research are expected to be released by the fourth quarter of 2022.
5 . Lastly, BANK AL- MAGHRIB-MOROCCO
Morocco’s Central bank is investigating the importance of launching a digital currency. This follows after many countries across the globe seems to go cashless.
IMPORTANCE OF DIGITAL CURRENCY
- To begin with, it is designed to promote and help bring about financial inclusion, enable direct welfare disbursements and facilitate diaspora remittances.
- Also, it will help cut costs of processing cash transactions.
- Moreover, it improves the availability and usability of money at the Central Bank.
- Furthermore, it increases the revenue and tax collection in a state.
- Last but not least, it supports a resilient payment system and improves the efficiency of cross-border payments.
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