Namibia Evaluates CBDC for Cross-Border Payments and Financial Inclusion

Namibia is actively exploring the potential introduction of a central bank digital currency (CBDC) to enhance cross-border payments and expand financial inclusion. The Bank of Namibia (BoN) is in the preliminary stages of assessing whether a digital Namibian dollar could effectively address existing payment system challenges, following a recent technical assistance mission from the International Monetary Fund (IMF).

While the IMF supports BoN’s research efforts, it has cautioned against an immediate full-scale rollout, recommending that Namibia first strengthen its existing payment infrastructure before advancing into CBDC implementation. The IMF also raised concerns about whether a retail CBDC (rCBDC) would significantly enhance financial inclusion, as the country anticipates.

Despite these recommendations, BoN remains committed to its exploration and is engaging with regional central banks, including those in Eswatini, Lesotho, and South Africa, to evaluate the potential benefits of a CBDC for cross-border transactions. The bank is incorporating the IMF’s insights while refining its strategy before making any final decisions.

Namibia first introduced the concept of a digital currency in 2022, releasing a consultative paper on CBDCs. However, progress has been cautious, with ongoing discussions among regional central banks about possible use cases. This measured approach aligns with the mixed experiences of other African nations in launching CBDCs.

For instance, Nigeria’s eNaira, introduced in 2021, has faced adoption challenges, while Zimbabwe opted for a gold-backed digital currency in 2023 to combat local currency devaluation. Ghana has been developing its eCedi for years but has yet to progress beyond pilot programs.

As Namibia navigates its next steps, the crucial question remains: Will the Bank of Namibia proceed with a full-scale CBDC rollout, or will it prioritize enhancing its existing financial systems first? For now, the country is taking a cautious and strategic approach, carefully weighing its options before making a definitive commitment.