The Bank of Uganda (BoU) recently announced that it is exploring the viability of issuing a Central Bank Digital Currency (CBDC) to be used by households and businesses. This was days before the Central Bank issued a circular to all payment service providers warning them against facilitating cryptocurrency transactions.
Officials from the Bank of Uganda (BoU) have awakened the conversation yet again and are now looking at Nigeria’s experience in building the first CBDC in Africa to pick lessons.
The Central Bank of Nigeria (CBN) mentioned in a tweet that its Governor, Godwin Emefiele, had advised visiting Bank of Uganda officials to discuss establishing a Central Bank Digital Currency.
According to Nigerian news outlets, the Governor stated that they are working to further entrench financial inclusion through the e-Naira and that Uganda may benefit from similar efforts.
The Governor also emphasized that having a CBDC will enhance the relationship between mobile banking and online businesses, while they are still treading cautiously.
The E-Naira has been performing well and Nigerians seem to have accepted it fast. The Central Bank of Nigeria has been encouraging people to utilize the e-Naira by conducting a public awareness campaign in Nigerian marketplaces and cities. The e-Naira, which was launched in October 2021, was ranked first in a report by PwC CBDC Global Index in 2022, amid various initiatives by central banks to construct Central Bank Digital Currencies.
According to the Bank of Uganda’s Executive Director of Operations, Charles Abuka, the bank is looking at the CBDC’s requirements and ‘what challenges it will help fix.’
However, because of limited internet and technology availability in rural areas, there are concerns that digital money will have an impact on financial inclusion.
East African counterparts like Kenya, Tanzania, and Burundi have all expressed interest in having a CBDC.
Sourced from BitKE