The Bank of Ghana (BoG) has proposed the use of hardware wallets for its central bank digital currency (CBDC) dubbed 'eCedi'.
The bank intends to make the eCedi available to those who do not have a bank account or even internet access.
eCede on arrival
In a planning paper released Tuesday, Africa's largest gold producer said digital currency should "complement" mobile money. According to the central bank, eCedi needs to be as intuitive as possible and seeks to improve financial inclusion.
“Using eCedi must be as easy and intuitive as possible. Consumers should be able to make a payment in the minimum number of steps, with a minimum required level of technical literacy ”.
The release noted that the BoG has designed two types of wallets for its CBDC. Hosted wallets, managed by financial institutions, will require internet access. While, hardware wallets "are secure portable storage devices" for individuals.
These hardware wallets operate in offline mode, as Ghana has only 53% of individual internet users as of 2019, according to World Bank data. As of January 2021, only 15,7 million individuals had access to the internet from Ghana's total population of 31,40 million. About 43% of Ghanaians do not have a bank account.
Additionally, the banking regulator said eCedi transactions will be free of additional fees, unlike mobile money transfers which have a transactional fee.
The offline eCedi was first introduced in October 2021 through smart cards - physical cards embedded with a chip, similar to credit / debit cards. Too bad it is not yet possible to exchange it like other cryptocurrencies on Bitcoin system, but if that happens, we will keep you updated.
Kwame Oppong, head of fintech and innovation at BoG, stressed that the offline functionality will allow Ghanaians, who lack reliable access to electricity and internet connectivity, to embrace the country's CBDC.
The BoG also partnered with German finance company Giesecke + Devrient to pilot a retail CBDC in the country.
The rapidly evolving CBDC approach of Africa
Ghana has positioned itself at the forefront of exploring and adopting a CBDC, cryptocurrencies such as Bitcoin and other digital assets in the West African region.
It quickly follows the South Central African nation Zambia in examining the merits of a CBDC to promote financial inclusion. Zambia said it is close to finishing research and implementing a CBDC by the end of the fourth quarter.
"The research findings will be part of the input into political considerations about introducing a central bank digital currency in Zambia," Nkatya Kabwe, Deputy Director of the Bank of Zambia, told Bloomberg in February.
Additionally, eNaira marks the first African CBDC issued and in circulation, regulated by the Central Bank of Nigeria. Digital currency serves as both a medium of exchange and a store of value. It offers better payment prospects in retail transactions than cash.
