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May 22, 2023
With Nigeria's eNaira failing to gain traction for use in the first year of the rollout, the African Central Banks' steps to adopt this was slowed down. Banks will be more vigilant about digital currencies and will be more thorough before releasing them.
Another African Central Bank said that before the launch, they would take a more cautious approach. The Central Bank will spend more time testing so that no loopholes are perceived as deficiencies, and comprehensive tests will be carried out.
For now, the African Central Bank notes that only 2 African countries are currently in the development stage of this digital currency, namely Mauritius and Tunisia. But the Central Bank also believes that African countries are ready to take significant steps toward CBDCs.
The African Central Bank told central banks of countries to have great insight into CBDCs before releasing them. This is indeed part of the goals of the G20, which wants to have a cross-border payment system that is fast, cheap, transparent, and secure.
The African Central Bank will test and experience overall uptake before the digital currency launch, especially if you look at the central banks of African countries, which have excellent traction for developing this currency to facilitate all transaction activities.
The African central bank has a great interest in digital currency production. Economists also see this as one of the steps to strengthen the line of African tourism, which motivated the government to discuss this CBDC agreement.
African nations can be said to be in the leading way in the development of digital currencies, along with Asians. Africans see the risk inherent in a cashless economy as profitable, mainly if the government can track all the purchases more easily.
Nevertheless, the impact of digital currencies on African economies will be very significant in the next few years. It helps to quell inflation and change the face of monetary transactions. However, the main concern that the African central bank has is related to eNaira.
Nigeria is the first African country to adopt digital currency and is even the second in the world. Nigeria began to adopt this government-backed digital currency in 2021. However, since then, the government of Nigeria's central bank has said this is overwhelming.
The government sees that eNaira still needs to achieve the goals it has prepared. Even the existence of the eNaira itself has started to be questioned. The government will continue to boost financial inclusion, improve security, and enhance usage.
According to the public, eNaira is not a sophisticated, independent, and flexible currency. That is also what makes many citizens choose to ignore this currency. Merely one year of its release, only about 0.5% of the population used eNaira.
Maira is issued and regulated by a government authority so that it can be more flexible. The use is also limited; it must only be based on the platforms and merchants that have been prepared. So that this currency is not popular, and even government interference is also an additional obstacle.
People don't trust the government to see their financial transaction information. So, using eNaira for transactions can make the government see it freely. Bank applications for this currency are also still small, and this has an impact on adoption.
According to another survey, eNaira's adoption is also hampered due to limited or no internet access in some parts of Nigeria, especially in rural areas. So this is also what has prompted African countries to be more vigilant in launching this currency so that it doesn't flop.
Digital currency is the favorite of many Africans. Plus, the goal of the G20 is to have a transaction system that is cross-border, easy, and inexpensive. But the African Central Bank will be more wary, especially after looking at eNaira.
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