Namibia is exploring a CBDC to improve cross-border payments and financial inclusion, following IMF advice to strengthen existing payment systems first. The Bank of Namibia is engaging with regional central banks for insights while noting the challenges faced by other African countries regarding digital currencies. Meanwhile, Safaricom is entangled in legal disputes over contract practices, and Namibia’s telecom sector sees a surge in data revenue, underscoring the shift towards digital services.
Namibia is considering the launch of its central bank digital currency (CBDC) to enhance cross-border payments and financial inclusion. The Bank of Namibia (BoN) is in preliminary discussions to evaluate whether the CBDC could effectively address the nation’s payment issues. Following advice from the International Monetary Fund (IMF), BoN is proceeding cautiously with its research, aiming to bolster the existing payment framework before a full-scale CBDC deployment.
The IMF has voiced skepticism regarding the immediate rollout of a retail CBDC (rCBDC), suggesting that efforts should prioritize upgrades to current payment systems, as the anticipated financial inclusion benefits may not materialize as hoped. Nonetheless, BoN is pursuing collaborations with central banks in neighboring countries—Eswatini, Lesotho, and South Africa—to investigate potential advantages of CBDCs in cross-border transactions.
Originally proposed in 2022, the concept of a digital Namibian dollar has made minimal progress aside from ongoing discussions with regional central banks about feasible applications. This cautious methodology is prudent considering the mixed results experienced by other African nations, including Nigeria’s unsuccessful eNaira and Zimbabwe’s gold-backed digital currency in 2023. Ghana, although piloting the eCedi, has yet to fully implement it despite positive trials.
The Bank of Namibia is assessing whether to implement the CBDC now or heed the IMF’s counsel to first reinforce its existing financial infrastructure. In a related development, Safaricom is facing legal action from a dealership partner alleging unfair contractual practices, while Namibia’s telecom sector has significantly increased its data revenue, accumulating over N$800 million in Q3 2024, highlighting the importance of digitalization in the region.
In summary, as Namibia navigates the potential introduction of a CBDC, the emphasis on enhancing current payment systems in alignment with IMF guidance remains significant. This strategic approach aims to avoid the pitfalls encountered by other African nations with digital currencies. Concurrently, Safaricom faces legal challenges over dealer contracts, while Namibia’s telecom industry undergoes a transformation, indicating the region’s growth in digital capabilities and economic opportunities.
Original Source: techpoint.africa
