Ghana plans Digital Currency (CBDC), while Nigeria Continues to be Africa’s Largest User of Crypto-currencies

On 11 August, the Bank of Ghana announced that it had partnered with Giesecke+Devrient to pilot a retail CBDC in Ghana. The Bank of Ghana confirmed that the digital currency – the e-cedi – is intended to complement and serve as a digital alternative to physical cash. During the pilot phase, the e-cedi will be tested with banks, payment service providers, merchants, consumers, and other relevant stakeholders.

Meanwhile, Nigeria is now second only to the US for bitcoin trading according to the bitcoin trading platform Paxful. The dollar volume of crypto received by users in Nigeria in May was $2.4bn, up from $684m last December, according to blockchain research firm Chainalysis. And the true scale of crypto flows through Africa’s largest economy is likely to be much larger, with many trades untraceable by analysts. An array of factors, from political repression to currency controls and rampant inflation, have fuelled the rapid rise of cryptocurrencies in Nigeria.

In February, the government took fright and banned cryptocurrency transactions through licensed banks. In late July, it announced a pilot scheme for a new government-controlled digital currency – hoping to reduce incentives for those wanting to use unregulated crypto. Nigeria’s experience holds lessons for governments around the world, many of which are now thinking hard about how to regulate digital currencies. Elsewhere, Egypt, Turkey and, surprisingly, Ghana have sought to clamp down on crypto trading, wary of potentially vast movements of digital funds beyond their regulatory controls.