After years of development, Ghana is finally ready to roll out its central bank digital currency (CBDC), the e-Cedi, marking a major step in the country’s digital finance landscape. The Bank of Ghana (BoG) has announced that the e-Cedi could be launched before the end of the year, pending approval from lawmakers.
Ghana was once at the forefront of CBDC innovation in Africa but fell behind when Nigeria introduced the eNaira over three years ago. However, Nigeria’s experience with its digital currency has not been entirely smooth.
Despite being the first CBDC on the continent, the eNaira has struggled with adoption, with less than 0.5% of Nigerians using it in its first year. By March 2024, it accounted for only 0.36% of the total money in circulation. Experts attribute the low adoption to weak infrastructure, unstable electricity supply, and concerns over financial security and trust in government policies.
To avoid similar setbacks, Ghana is introducing offline functionality for the e-Cedi, ensuring it remains usable even in areas with limited Internet access. This feature could be a game-changer, especially for rural communities where digital connectivity remains a challenge.
According to BoG’s fintech and innovation head, Kwame Oppong, the central aim is to make digital cash as accessible and convenient as physical cash, particularly for the unbanked population.
Despite the enthusiasm surrounding CBDCs, the debate over their necessity continues. Some countries have abandoned their CBDC plans, citing the efficiency of existing digital payment systems. However, Ghana maintains that an offline-capable digital currency offers advantages over conventional instant payment solutions, as it does not rely on Internet connectivity.
Unlike other nations experimenting with blockchain technology for their CBDCs, Ghana is opting for a more centralized approach in the initial phase. The e-Cedi will operate on a centralized system at first, with the potential to integrate blockchain-based infrastructure in the future if required. This approach aligns with the country’s strategy of starting simple and expanding as needed.
Meanwhile, the global conversation around digital currencies remains heated. The Bank for International Settlements (BIS) remains skeptical about stablecoins, with its head, AgustĂn Carstens, arguing that improvements in CBDCs and traditional financial systems could render stablecoins obsolete. The BIS has long been critical of cryptocurrencies, asserting that the sector is more centralized than it claims, with a few dominant players controlling the market.
As countries like Ghana move forward with CBDC development, the battle between traditional finance and cryptocurrency is expected to intensify. Whether the e-Cedi succeeds where the eNaira has struggled remains to be seen, but its introduction marks a significant moment in Africa’s evolving digital currency landscape.