Like Nigeria, Kenya Set to Adopt Digital Currency Hinged on its Success of Mobile Money

Like Nigeria, Kenya Set to Adopt Digital Currency Hinged on its Success of Mobile Money

  • As digital currency adoption trends across the African continent, the Kenyan Central Bank has issued a discussion paper of e-Ksh
  • The country's apex bank said it is taking a cue from the Mobile Money transfer, namely the M-Pesa
  • Several countries in Africa has either adopted digital currency or on the verge of doing so following the in steps of Nigeria which launched in October 2021

Like Nigeria, the Central Bank of Kenya (CBK) has issued a dialogue paper on the adoption of digital currency in the country as it prepares to fully implement CBDC in the country.

The paper dated February 2022, spells out the prospects, risks and applicability of the digital currency in Kenya.

Kenya set to adopt digital currency
Kenya set to adopt digital currency Credit: Mark Loren
Source: UGC

It is a call by Kenya’s apex bank to the public to convey their views on the chances of adopting a digital currency before May 20th, 2022.

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What Kenyan Central Bank is saying

As CBDCs continues to receive global attention, the Kenyan central bank said its interest in digital currency is mainly influenced by its philosophy of creativity which seeks to reduce risks and maximise opportunities.

Taking a cue from the success of mobile money in Kenya and how it is helping to address the challenges of people transferring money from urban to the areas, the CBK said its direction of the assessment of CBDC creativity must be on how it functions and its problem-solving capabilities for the people rather the technology involved.

According to the bank, as CBDC presents possibilities to reduce costs associated with online payments, it also comes with dangers especially related to cybersecurity and unknowns on how it would affect central banks’ core processes of monetary policy, financial stability and payment systems oversight. Further, in the case of Kenya where electronic money has taken root, the proposed value solution offered by CBDC seems to be already met.

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What to know about digital currencies across Africa

Unlike cryptocurrencies, CBDCs are developed by central banks and pegged on countries’ fiat currencies.

Across the globe, only nine countries have launched digital currency while fourteen are in pre-launch stage.

Nigeria is the first African country to launch CBDC in October last year while Ghana is still at an advanced stage of launching its e-cedi.

Zambia has also begun CBDC research and expects to complete research on forming a digital currency that could cut transaction costs and boost participation in the formal financial system by the fourth quarter.

Nigeria's e-Naira has witnessed slow adoption as the country introduced the digital currency to lure Nigerians away from cryptocurrency as the Central Bank of Nigeria seeks to regulate cyptos in the country.

CBN said it the e-Naira completed over N188 million transactions and seen close to 500,000 downloads in Nigeria and beyond.


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