Cryptocurrencies despite being scrutinized by regulators are becoming immensely popular. African states have joined the race in following the current financial tech hype. West Africa’s most prosperous economies, Nigeria and Ghana have stepped ahead in the race of cryptocurrencies. They are about to adopt cryptocurrencies or CBDC as their legal tender.
The Central Banks of Nigeria and Ghana have collaborated with foreign companies to launch digital currencies. Although, the banks of both these countries have been aversive of the proliferation of cryptocurrencies. However, Africa is seeking financial refuge in cryptocurrency, it is a way to compensate for the extensive unemployment, their currency losing value, major market inflation, and so on.
Nigeria’s and Ghana’s Initial Journey of CBDC
The initiative taken by Nigeria and Ghana of issuing Central Bank issued Digital Currency (CBDC) are implemented despite banks banning transactions in cryptocurrencies. crypto enthusiastic people and tech-savvy youths are anyhow continuing to utilize digital currencies and cryptos in the African countries.
Recently, Chainalysis recorded the stats and reported a list of countries that adopted cryptocurrencies and it is booming among the populations of the respective geoeconomic borders.
Ayodeji Ebo, head of retail investment at Lagos-based invest commented, “Nigerians are investing in cryptocurrency as a means of store value and to carry their funds outside the shores of their country.”
Africa’s largest and world ranking 27th largest economy – Nigeria will launch its digital currency eNaira on October 1. On the other hand, Ghana will start its experimentation and circulation of e-Cedi from this month onwards.
Ayodeji Ebo said, “eNaira will be for transactional purposes.”
The Bank of Ghana is collaborating with a German firm named Giesecke+Devrient to launch e-Cardio and carry out a pilot project.
The firm will provide all the amenities and technology that will be required to assess this pilot within the sphere of local banks, financial service providers, other bodies of finance and payment at the local level, and consumers.
Nigeria on the other hand collaborated with a global digital finance company – Bitt Inc. to launch the CBDC pilot known as “Project Giant”. This pilot has a background of more than three years of research, as per media reports.
The central bank of Nigeria stated, ” The CBN will rely on the company’s tested and proven digital currency experience, which is already in circulation in several eastern Caribbean countries.”
The CBDC of Nigeria, eNaira will be issued by the CBN. It will be accepted as a legal tender similar to that of Naira, henceforth October 1. It will be operated on Hyperledger Fabric Blockchain.
People using the eNaira will be able to download the digital software application and link their existing bank accounts with this app, told by CBN.
Let us see if digital currency will be the new norm for finance in the coming years. How many other countries will be inspired by this advancement?