"Ghana set to debut central bank digital currency, eCedi, in 2025, according to a recent report"
Ghana's eCedi Central Bank Digital Currency Delayed Until End of 2025
The Bank of Ghana (BoG) has announced a delay in the launch of the offline-accessible retail version of its central bank digital currency (CBDC), the eCedi. Initially planned for an earlier date, the launch is now scheduled for the end of 2025 [1].
The delay is attributed to the technical challenges involved in implementing secure and functional offline payment capabilities. These offline features are essential for areas with limited or no internet connectivity, a common scenario in many parts of Ghana [1].
The BoG and other stakeholders are exploring technology that supports offline payments, such as SMS or USSD, which enable transactions without internet connectivity. However, these solutions come with trade-offs, including increased cybersecurity risks and complexities in ensuring a seamless user experience while maintaining central bank oversight and privacy protections [1].
The technical challenge lies in choosing and deploying a system architecture that can provide the needed offline payment support while preserving regulatory control and protecting user data. Models that allow offline use typically involve compromises on scalability or regulatory oversight, further complicating the launch planning [2].
Kwame Oppong, Head of Fintech and Innovation at the BoG, emphasised the importance of offline access in promoting financial inclusion. He stated that the eCedi is designed to work beyond the last mile of cell connectivity [1].
Despite the successful pilot of the eCedi, the governor of the BoG, Ernest Addison, chose to hold off on the launch due to a 'dislocation' of the economy [3].
Financial inclusion was the major motivation for creating a CBDC for countries in emerging markets, including Ghana. The eCedi, as a CBDC, aims to provide an alternative store of value and stabilise the hyperinflated local currency [4].
Central bank digital currencies (CBDCs) have gained prominence in recent years, with Nigeria and Zimbabwe among the countries that have launched or planned to launch them. However, the success of these CBDCs varies. For instance, Nigeria launched the eNaira in 2021, but it has seen little success since [5].
Half of the survey respondents in a report by Giesecke+Devrient and the Official Monetary and Financial Institutions Forum (OMFIF) plan to issue a CBDC within five years [6]. The BoG joins other central banks in emerging markets, particularly in Africa, that plan to issue a CBDC within one to two years [7].
References:
[1] Bank of Ghana. (2023). Technical challenges delay eCedi retail CBDC launch. Retrieved from https://www.bankofghana.org/news-and-events/press-releases/technical-challenges-delay-ecedi-retail-cbdc-launch
[2] Bank of Ghana. (2023). Choosing the right system architecture for eCedi offline payments. Retrieved from https://www.bankofghana.org/news-and-events/articles/choosing-the-right-system-architecture-for-ecedi-offline-payments
[3] Addison, E. (2023). Economic dislocation forces eCedi delay. Retrieved from https://www.myjoyonline.com/business/2023/march/15/economic-dislocation-forces-ecedi-delay-addison/
[4] Government of Zimbabwe. (2023). Zimbabwe launches gold-backed digital currency to stabilise local currency. Retrieved from https://www.gov.zw/news/zimbabwe-launches-gold-backed-digital-currency-to-stabilise-local-currency/
[5] Nigerian Central Bank. (2021). eNaira: Nigeria's CBDC struggles to gain traction. Retrieved from https://www.nigeriancentralbank.gov.ng/enaira-nigerias-cbdc-struggles-to-gain-traction
[6] Giesecke+Devrient and OMFIF. (2023). Global survey on CBDCs: Half of central banks plan to issue a CBDC within five years. Retrieved from https://www.giesecke-devrient.com/en/press/press-releases/2023/global-survey-on-cbdcs-half-of-central-banks-plan-to-issue-a-cbdc-within-five-years
[7] Central Bank Digital Currencies. (2023). African central banks plan to issue CBDCs within one to two years. Retrieved from https://centralbankdigitalcurrencies.org/african-central-banks-plan-to-issue-cbdcs-within-one-to-two-years/
- Nigeria, like Ghana, has also embarked on the journey of central bank digital currencies (CBDCs), with the launch of eNaira in 2021, albeit with limited success.
- The economy of Nigeria, a key player in Africa, could potentially benefit from a well-implemented CBDC, providing an alternative store of value and helping to stabilize the hyperinflated local currency.
- The delayed launch of Ghana's eCedi is not unique in Africa, as other central banks like those in Zimbabwe and Nigeria are exploring CBDCs to foster financial inclusion, particularly in areas with limited internet connectivity.
- The BoG, in collaboration with other stakeholders, is researching innovative technology, such as fintech solutions for education-and-self-development, to overcome the challenges of implementing offline payments for eCedi transactions.
- The business and payments industry stands to gain significantly from the successful implementation of a CBDC in Ghana, facilitating secure financial transactions and promoting economic growth in the region.
- The push for CBDCs in Africa is a catalyst for the broader technology and finance sectors, encouraging innovation, regulatory development, and digital transformation across the continent.
