Interests are growing on the need for a harmonized digital currency to boost transborder transactions and remittance among Africans. With the blockchain technology available for optimum creation of digital currency, time is ripe to have a common Africa Digital Currency, just like Europe’s Euros (though not digital).
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CBDCs Central Bank Digital Currencies are believed to make sending remittances easier, faster, and cheaper by shortening payment chains and creating more competition among service providers. Faster clearance of cross-border payments would help boost trade within the region and with the rest of the world.
The head of the Bank of Central African States (BCAS), Herve Ndoba, has told the regional central bank’s board that it must create a common digital currency which will be used by six countries belonging to the Central African Monetary Union (CAMU). Ndoba reportedly wants the BCAS to establish a common legal framework for regulating crypto as well. The call should extend to cover the whole of Africa.
When the eNaira, the digital form of the naira and the first national digital currency in Africa, was launched by the Central Bank of Nigeria (CBN), officials of the apex bank said it would allow for financial inclusion and fiscal benefits to ultimately boost the economy, such benefits will be best enjoyed when extended on continental.
The discussion paper by Kenya’s central bank says a CBDC in the country wouldn’t focus on enhancing access to financial services considering the high penetration of mobile money in the country. Instead, it would target cost reduction for transactions, payment interoperability between merchants and agents, and improving the efficiency—speed and cost—of cross-border payments.
The combined states of the African Union (AU) constitute the world’s 11th largest economy with a nominal gross domestic product (GDP) of US$2263 billion. By measuring GDP by purchasing power parity (PPP), the African Union’s economy totals US$1.515 trillion, ranking it 11th after Russia.
The African Union should hasten it’s policy framework on African Central Bank, African Investment Bank and African Monetary Fund to create strong economic pillar for the continent. The absence of this unified bodies are hindering the continent’s financial growth and the quest for a common Africa Digital Currency.