Today the Bank for International Settlements (BIS) published aĀ paperĀ on central bank digital currency (CBDC) in Africa, highlighting that motivations differ from other emerging market countries.
In terms of progress, Nigeria has launched itsĀ eNaira retail CBDC,Ā GhanaĀ is in the pilot phase andĀ South Africa ran a pilotĀ for a wholesale CBDC.
Mobile money is the dominant form of digital payment in Africa, led by Kenyaās M-Pesa. These systems enable faster payments but half of the 19 African central banks believe that CBDC would provide a better solution.
The prevalence of mobile money provides an important backdrop regarding CBDC motivations, highlighting why person-to-person payments are not a high priority. Africa accounts for two thirds of mobile money transactions globally.
The number one CBDC motivation amongst the 19 African central banks is to provide central bank digital cash, followed by better financial inclusion and as a tool for implementing monetary policy. Using programmable money scored very low as a priority.
The top three concerns about deploying a digital currency are cyber security risks followed by worries about disintermediating banks and whether or not a CBDC will gain traction with consumers.
Overall the BIS assessed the African continent as slower moving in CBDC deployment compared to other parts of the world.
Meanwhile, at a recent summit of sub-Saharan African central bankers, the topic ofĀ CBDC for cross border remittancesĀ was discussed. South Africa has already been involved in cross border research as part ofĀ Project Dunbar, aĀ multi-CBDCĀ project with the central banks of Singapore, Malaysia and Australia.
