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Two West African countries, Ghana and Nigeria, have launched Africa’s first-ever Central-Bank Digital Currencies (CBDC), a move expected to widen payment options for the two African countries’ populations.
Quartz Africa (QA) reported that a central-bank digital currency is the virtual or digital form of a country’s fiat currency. It is regulated by the nation’s central bank, adding that other African countries, namely; Rwanda, South Africa, Tanzania, and Kenya are also conducting research on the adoption of the same.
To launch the CBDC, QA indicated that Nigeria partnered with Bitt, a global financial technology company, while Ghana hired a German firm Giesecke+Devrient for its e-cedi pilot.
Officials from Ghana and Nigeria told QA that they launched digital currencies to promote financial inclusion by bringing the unbanked public into the financial system.
According to Investopedia, CBDCs are meant to represent fiat currency. The goal is to provide users with convenience and security of digital as well as the regulated, reserve-backed circulation of the traditional banking system. They are designed to function as a unit of account, store of value, and medium of exchange for daily transactions. CBDCs will be backed by the full faith of the issuing government—just like fiat currency. Central banks or monetary authorities will be solely liable for their operations.
Since the turn of the millennium, Africa has been making great strides in going digital in various sectors of the economy, such as mining, agriculture, and banking.