The list of countries working on getting their Central Bank Digital Currency (CBDC) ready for use continues to grow longer every day. Chinaa, Russia, Japan, the US, Barbados, Singapore, and other countries continue to actively explore this trend.
However, the most recent country to join the list is the largest economy in East Africa, Kenya. The country – although not the foremost region to begin processing a CBDC – is starting its own process at a critical time. Global conversations on CBDC continue to flare up around the globe.
According to Central Bank of Kenya (CBK) governor, Dr. Patrik Njoroge the country is forced to look towards a CBDC ,because of the rapid growth of private cryptocurrencies. He also discloses that Kenya is feeling left out and need to get ready for the future. Officials are already discussing with other global players to introduce their CBDC.
South Africa, the second-largest economy in Africa began talking about processing a CBDC earlier. South Africa Reserve Bank (SARB) began researching the potential of an electronic digital currency in 2016.
Kenya CBDC key to vision 2030
From all indications, a CBDC in Kenya will materialize soon. Kenyans await their Kenyan shilling to be digitized into a Digital shilling.
As the CBK explores ways in which a CBDC can help it achieve its mandates. First of all, the goal is to stabilize the Kenyan economy. Second, a CBDC can play a key role for the country’s vision by 2030. The 2030 projection details how officials will establish a strong economic system in the East African nation. Kenya has been working on developing a suitable payment system. Priorities include safety and security but also simplicity, speed, cost-effectiveness, and ease of use.
Prior to its CBDC plan, Kenya made progress in modernizing its retail payments and financial services system. Several means of digital payments – M-Pesa, online credit card payments, or SportPesa – have been widely adopted by Kenyans. These digital payment providers help reduce cash usage in the domestic economy.
Crypto adoption in Kenya
Recent reports by Chainalysis rank Nigeria, South Africa, and Kenya among the top ten countries for cryptocurrency adoption.
The top ten countries in the Global Cryptocurrency Adoption Index: Chainalysis
Kenyan merchants and traders in the region flock toward the crypto asset economy. Moreover, crypto adoption in the country is on the rise as they have a wide variety of exchange avenues to choose from. This applies to both purchasing and selling of cryptocurrencies.
CBK governor Njoroge believes that a CBDC and other digital currencies have a place in Kenya’s economy. He also believes that Kenya has a long way to go to achieve a cashless economy. Transitioning from one system to the next is a processed that requires time.