The African CBDC Landscape
Africa has emerged as an active region for central bank digital currency development. Multiple countries are at various stages of exploration, piloting, and implementation, each with distinct motivations and approaches.
Understanding this landscape is essential for institutions operating across the continent.
Current Initiatives
Nigeria - eNaira
Africa's first CBDC, launched in October 2021. Key features:
- Retail-focused design
- Mobile-first approach
- Interoperability with existing payment systems
- Tiered KYC requirements
Adoption has been gradual, with ongoing efforts to increase merchant acceptance and user adoption.
Ghana - e-Cedi
Pilot completed, with phased rollout underway. Notable for:
- Offline capability for areas with limited connectivity
- Integration with mobile money ecosystems
- Focus on financial inclusion
South Africa - Project Khokha
Wholesale CBDC exploration focused on:
- Interbank settlement
- Cross-border payments
- Integration with Project Dunbar (multi-CBDC platform)
Kenya - Digital Shilling Research
Central Bank of Kenya conducting research on CBDC feasibility, with particular focus on:
- Impact on mobile money ecosystem
- Cross-border remittance efficiency
- Monetary policy implications
Regional Initiatives
ECOWAS
The Economic Community of West African States is exploring a regional digital currency that could:
- Facilitate intra-regional trade
- Reduce dependence on foreign currencies
- Support eventual monetary union objectives
East African Community
Discussions on potential regional CBDC coordination to support East African integration objectives.
Design Considerations
African CBDC initiatives share several common design considerations:
Financial Inclusion
Extending financial services to unbanked populations is a primary motivation. This drives design choices around:
- Simplified KYC for basic accounts
- Offline functionality
- Mobile-first interfaces
- Low or zero transaction fees
Mobile Money Integration
Existing mobile money ecosystems are significant. CBDCs must either:
- Integrate with mobile money providers
- Offer compelling alternatives
- Operate as parallel systems
Infrastructure Constraints
Limited infrastructure in many areas requires:
- Offline capability
- Low bandwidth requirements
- Resilience to connectivity interruptions
Cross-Border Payments
Reducing remittance costs and improving cross-border trade efficiency are important objectives, driving interest in interoperable designs.
Implications for Institutions
Payment Services
CBDC implementation will affect payment service providers. Understanding CBDC architecture is essential for service design.
Banking Operations
Banks must prepare for CBDC integration, including:
- Technical integration requirements
- Impact on deposit bases
- New service opportunities
Cross-Border Operations
Regional CBDC developments could significantly affect cross-border transaction flows and costs.
Leadwood's Africa Practice
We help institutions navigate African CBDC developments:
- CBDC landscape assessment
- Integration strategy development
- Regulatory engagement
- Partnership identification
For African CBDC advisory services, contact enquiries@leadwood.consulting.