Nigeria and Ghana are trying to ride the wave of cryptocurrency popularity in West Africa by accelerating to adopt a central bank digital currency as they try. In fact, the central banks of these two countries have collaborated with foreign financial technology companies to create digital versions of their currencies, joining countries that explore the initiative such as China, Europe and the United States.
In Africa, cryptocurrencies and stablecoins are fast becoming popular, especially among youngs, who continue to explore new ways to make money and retain value in the face of unemployment and inflation. The Nigerian central bank earlier this year ordered lenders to stop facilitating cryptocurrency transactions with the usual accusations of money laundering and terrorist financing, forgetting that it is easier to commit crimes with cash and that in any case not. it is the means that determines the illicit conduct. Despite the central bank ban, many Nigerians continue to bypass traditional industries to use cryptocurrencies for faster and more efficient overseas transactions.
eNaira, the CBDC linked to the bank account
Nigeria ranked sixth globally in cryptocurrency adoption this year, according to blockchain data platform Chainalysis. There has been an increase in the use of cryptocurrencies in the country, despite bans on banks from transacting, as people seek ways to escape the weakening of the Naira, and offset the high cost of living and unemployment in the larger country populous in Africa. Using crypto is also a great way for Nigerians to keep value stable and get their funds out of the country. The eNaira would be the name of Nigeria’s new cryptocurrency, and the launch is scheduled for October 1st, and will be used for transactional purposes.
Nigeria has selected global financial technology firm Bitt Inc. for its CBDC launch known as “Project Giant” after more than three years of digital currency research.
The Central Bank of Nigeria will rely on the company’s experience, and the new eNaira will be issued by Vanca Centrale as legal tender, just like the current naira currency. It will operate on the Hyperledger Fabric Blockchain and will also follow the official exchange rate. Starting October 1st, customers will be able to download the eNaira app and use their wallets linked to their bank accounts.
Ghana will try e-Cedi starting this month
The Bank of Ghana is collaborating with the German company Giesecke + Devrient to develop the e-Cedi. The scheme is part of a larger plan to digitize the country. G + D will provide the technology which will be tested in a trial phase with local banks, payment service providers, consumers and others.
Central banks vying for their virtual currency
Central banks around the world are exploring ways to create virtual money as legal tender following the growth of digital payments and, including following the recent pandemic that has boosted the digital transition.
China became the first major economy to develop the switch to a digital currency last year. At least five other countries have launched digitized currencies developed by central banks. Although some African countries such as Kenya, South Africa and Rwanda are exploring Central Bank Digital Currency, Nigeria and Ghana have already reached advanced stages.
