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Kenya is exploring the possibility of developing and launching a central bank digital currency (CBDC) to settle cross-border payments, as it seeks to advance the shift to a cashless economy and secure transactions.
The Central Bank of Kenya Governor, Dr Patrick Njoroge, says CBDCs can slash the time needed for cross border payments in addition to cutting costs significantly. A Central bank digital currency (CBDC) is money that exists in electronic form, issued and regulated by the nation’s monetary authority and backed by the government.
Speaking on the sidelines of the Afro-Asia Fintech festival which was held virtually, Njoroge said that CBDCs can enhance the efficiency of cross-border payments, as long as countries work together. “We see the benefits would be more cross border…” said CBK Governor. “The issue is not to be first, the issue is to do it right.”
Towards this end, Dr Njoroge said that Central Bank of Kenya (CBK) is in discussions with other global Central Banks. Many central banks across the world are considering issuing digital currencies to cater to businesses and households seeking faster, safer, easier, and cheaper means of payments.
Nigeria became the first country in Africa and among the few nations in the world to launch its own Central Bank Digital Currency, eNaira. The eNaira saw over 400,000 new wallets registered with 12,500 transactions worth $113,000 in less than two weeks of launch.
Central Bank of Nigeria (CBN) eNaira is predicted to benefit the economy by saving the huge cost of managing physical cash and including more Nigerians in the financial sector, as those who do not have bank accounts can easily key into the eNaira.
Central Bank of Nigeria says among other benefits, the digital currency will also help in tracking money laundering and f***d as data generated will give authorities more control. By launch time, 33 banks had fully been integrated on the eNaira platform, with over 2,000 customers on board and over 120 merchants successfully registered.
The launch of eNaira is a milestone for Africa. The main global cryptocurrency brands include Bitcoin, Litecoin, XRP, Dash, Lisk and Monero, but Bitcoin leads the pack in Africa. A handful of countries including China, Bahamas, and Cambodia have already issued their own CBDCs.
Seven countries have now fully launched a digital currency, according to Central Bank Digital Tracker. Nigeria is the latest country to launch a CBDC, and the first outside the Caribbean. Several major economies are engaging in cross border payment tests, the newest being Project Dunbar a partnership between South Africa, Singapore, Malaysia, and Australia .
In 2019, Tunisia became the first African country to move its national currency to a blockchain platform with the help of the universal contracting platform, Monetas. The eDinar, as it’s called, can be used to make money transfers, pay for utility bills, and manage official government identification documents.
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