Nigeria, Ghana sprint to join digital currency race

Nigeria and Ghana are racing to follow a cardinal slope integer currency arsenic they look to thrust the question of popularity of cryptocurrencies successful West Africa's 2 largest economies.

Central banks successful some countries person partnered with overseas fiscal tech companies to make integer versions of their currencies, joining the planetary bid of countries exploring the initiative.

Nigeria, Africa's largest economy, volition motorboat its eNaira digital currency connected October 1, portion Ghana volition proceedings e-Cedi from this month.

Nigeria has seen a roar of cryptocurrencies, contempt a prohibition connected banks making the transactions, arsenic radical look for ways to flight the weakening naira currency and offset precocious outgo of surviving and unemployment successful Africa's astir populous country.

"Nigerians are investing successful cryptocurrency arsenic a means of store worth and to transportation their funds extracurricular the shores of the country," said Ayodeji Ebo, caput of retail concern astatine Lagos-based concern steadfast Chapel Hill Denham.

"eNaira volition beryllium for transactionary purposes."

Central banks crossed the satellite are exploring ways to make virtual money arsenic ineligible tender pursuing the maturation successful integer payments, cryptocurrency and privately issued stablecoins.

Both alleged cardinal bank-backed CBDCs and cryptocurrency are virtual money: CBDCs are issued and regulated by the cardinal slope portion the different is retired of authorities control.

China became the archetypal large system to aviator a integer currency past year. Since then, 5 countries person launched digitised currencies, according to a CBDC tracker by American think-tank Atlantic Council.

Although immoderate African countries specified arsenic Kenya, South Africa and Rwanda are exploring CBDCs, Nigeria and Ghana person already reached precocious stages.

Step by step

The Bank of Ghana is partnering with German steadfast Giesecke+Devrient (G+D) to aviator the e-Cedi. The strategy is portion of a broader program to digitise the state and its government.

G+D volition supply the exertion that volition beryllium tested successful a proceedings signifier with section banks, outgo work providers, consumers and others.

Nigeria selected planetary fiscal exertion institution Bitt Inc. for its CBDC motorboat known arsenic "Project Giant" aft much than 3 years of probe into the integer currency.

"The CBN volition trust connected the company's tested and proven integer currency experience, which is already successful circulation successful respective eastbound Caribbean countries," the Central Bank of Nigeria said.

The caller eNaira volition beryllium issued by the CBN arsenic ineligible tender similar the existent naira currency and volition run connected the Hyperledger Fabric Blockchain. It volition besides travel the authoritative speech rate.

Starting from October 1, customers volition beryllium capable to download the eNaira app and money their mobile wallets utilizing their existing slope accounts, according to CBN politician Godwin Emefiele.

Boom and concerns

Nigeria's cardinal slope has agelong disquieted astir the interaction of cryptocurrencies and stablecoins that are accelerated becoming fashionable among young and tech-savvy residents.

Young Nigerians proceed to research caller ways to marque wealth and store worth successful the look of double-digit joblessness and ostentation arsenic good arsenic the illness successful worth of the section naira.

Nigeria's cardinal slope earlier this twelvemonth ordered lenders to halt facilitating cryptocurrency transactions implicit allegations they were being utilized for wealth laundering and coercion financing.

In spite of the cardinal slope ban, galore Nigerians inactive skirt accepted sectors to usage cryptocurrency for overseas transactions.

Emefiele says eNaira volition payment Nigeria's system successful galore ways, from cross-border commercialized to making remittance inflows much efficient.

Remittances fell to $17.2 cardinal past year, the lowest level since 2007.

Some of that was owed to Covid-19 pandemic fallout, but observers accidental Nigerians overseas are moving distant from authoritative channels to cryptocurrency transactions seen arsenic faster and much efficient.

Nigeria climbed 2 steps this twelvemonth to fertile sixth globally successful crypto adoption, according to blockchain information level Chainalysis.

Already, immoderate analysts question the eNaira's operating exemplary with Nigeria already utilizing a big of existing physics outgo channels, including net banking and mobile apps.

"Digital currency is heavy babelike connected astute devices," said Joel Ogunsola, CEO of UK-based exertion solutions institution Prunedge.

"If you look astatine the fig of radical who person these devices successful Nigeria, it astir looks similar you are gunning for the aforesaid market."

But the main economist for Nigeria astatine PwC, Andrew Nevin, said the eNaira comes with the payment of easier and little transaction costs.

"The eNaira helps to trim the outgo of payment," Nevin said. "That's the constituent of deploying a larger technology, which is the ground for the cardinal slope integer currency."

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© 2021 AFP