Nigeria and Ghana are looking forward to adopting central bank digital currencies as they look to ride the wave of popularity of cryptocurrencies in West Africa’s two largest economies.
The Central banks in both countries have partnered with foreign financial tech companies to create digital versions of their currencies.
The Bank of Ghana has partnered with German firm Giesecke+Devrient (G+D) to pilot the e-Cedi. G+D will provide the technology that will be tested in a trial phase with local banks, payment service providers, consumers and others. Ghana is set to trial e-Cedi from this month.
On the other hand, Nigeria selected global financial technology company Bitt Inc. for its Central Bank Digital Currencies (CBDC) launch known as “Project Giant” after more than three years of research into the digital currency.
Nigeria has seen a boom of cryptocurrencies, despite a ban on banks making the transactions, as people look for ways to escape the weakening naira currency and offset the high cost of living and unemployment in Africa’s most populous country.
“Nigerians are investing in cryptocurrency as a means of store value and to carry their funds outside the shores of the country, eNaira will be for transactional purposes.” Ayodeji Ebo, head of retail investment at Lagos-based investment firm Chapel Hill Denham.
Nigeria will launch its eNaira digital currency on 1st October 2021, when customers will be able to download the eNaira app and fund their mobile wallets using their existing bank accounts.
The eNaira will be issued by the CBN as legal tender like the current naira currency and will operate on the Hyperledger Fabric Blockchain. It will also follow the official exchange rate.
CBN governor Godwin Emefiele says the eNaira will benefit Nigeria’s economy in many ways, from cross-border trade to making remittance inflows more efficient.
China became the first major economy to pilot a central bank digital currency last year. Since then, five countries have launched digitised currencies, according to a Central Bank Digital Currencies tracker by American think-tank Atlantic Council. Other African countries exploring CBDCs include Kenya, South Africa, and Rwanda.