Ghana is set to Test its Digital Currency, the eCedi

The race to roll out e-cash on the continent has heated up with Ghana becoming the latest African nation to start evaluating the sustainability of its central bank-backed digital currency, the eCedi.

After Nigeria introduced the eNaira in October 2021, only South Africa and Ghana remain in the pilot stage of the process.

A contactless smart card is being used in Sefwi Asafo, a tiny town in Ghana’s Western North Region, to test an offline version of the eCedi. A digital wallet application can be used to make payments between customers and merchants using the retail Central Bank digital currency known as eCedi.

Ernest Addison, the governor of the Bank of Ghana, selected to test the eCedi in a location with little to no network infrastructure with the goal of promoting financial inclusion.

During the nation’s sixth CEO Summit a month ago, Addison remarked, “Digitalizing the offline transactions of rural and frontier households holds the key to building the required market linkages that could result in access to financing in the future.”

Some residents of Sefwi Asafo have been using the eCedi to make regular grocery purchases, and the bank has stated that it will keep gathering important usage data from the transactions in order to make decisions on the future of the eCedi after the trial.

In a speech, Addison stated that these developments are “certainly milestone events in giving digital leadership with the payment systems, to lead to a digitised economy in the near future.”

South Africa, in contrast, is running two pilot programs to evaluate a wholesale CBDC. The first examines how financial institutions are using an electronic currency for interbank transfers as part of Project Khokha, while the second examines cross-border payments between the South African Reserve Bank and the central banks of Australia, Malaysia, and Singapore.

According to the International Monetary Fund’s (IMF) most recent report, CBDCs that enable cross-border payments could help lower transfer costs and make sending remittances simpler, quicker, and more cheap.

Faster cross-border payment clearance would help increase trade both inside the area and globally, according to the IMF.

At least 15 African nations are either in the research, development, or pilot stages of launching regulated virtual currencies, according to announcements.

Four nations have declared their plan to use digital currencies in 2022: Rwanda, Zambia, Sudan, and Uganda, according to the Central Bank Digital Currency (CBDC) tracker.

TemTum, a technology company with its headquarters in the UK, and the Central Bank of Uganda have been negotiating to create a CBDC. Uganda is considering using a blockchain network to manage its digital currency because it can facilitate high-value transactions at a lower cost.

TemTum boasts of a cutting-edge blockchain technology and encryption that it claims to be extremely quick, quantum safe, energy-efficient, and highly scalable.

Zambia is also considering a platform that will reduce expensive transaction fees and promote financial inclusion. The Central Bank of the nation anticipates finishing its investigation by the fourth quarter of 2022.

Zimbabwe and Kenya had both previously stated that they planned to embrace digital currencies in 2021, although they have not yet done so.

Research is now being conducted in Namibia, Tanzania, Mauritius, Morocco, Egypt, Tunisia, and Eswatini.

Nigeria is attempting to increase the use of the eNaira and has plans to make the digital money accessible to millions of users of feature phones through Unstructured Supplementary Service Data (USSD). Since its introduction, the currency has only attracted little more than 800,000 users, which is a poor adoption rate.

In its weekly blog, the Rhw IMF stated that CBDCs, particularly if created for offline use, might provide financial services to people who previously lacked bank accounts.

The IMF stated that simple feature phones can be used to conduct digital transactions in remote locations without access to the internet for little to no cost.

In the wake of Jamaica’s JAM-DEX debut, a total of 10 nations worldwide have officially introduced digital currencies.

The American think tank The Atlantic Council anticipates that number to rise as 50 nations move into the advanced stages of exploration-development, pilot, or launch, China is now piloting a CBDC, and other factors.