Plans by the Bank of Ghana to introduce digital currency called the e-cedi has been welcomed by Andrew Takyoi-Appiah, Managing Director of Africa’s leading challenger Fintech, Zeepay, as evolutionary, especially, at a time the global financial system is struggling to emerge from the devastations left behind by the deadly COVID-19 pandemic.
The governor of the central bank, Dr. Ernest Addison, earlier this year disclosed that the bank was partnering with Giesecke+Devrient (G+D) to pilot a general-purpose Central Bank Digital Currency (retail CBDC) in Ghana.
G+D is expected to provide the technology as well as develop the solution adaptable to Ghana’s requirements, which would be tested in a trial phase with banks, payment service providers, merchants, consumers and other relevant stakeholders
The project which is part of the ‘Digital Ghana Agenda’ and the digital Cedi, or ‘e-Cedi’, is intended to complement and serve as a digital alternative to physical cash, thus driving the Ghanaian cash lite agenda through the promotion of diverse digital payments, while ensuring a secure and robust payment infrastructure in Ghana.
It also aims to facilitate payments without a bank account, contract, or smartphone, by so doing boosting the use of digital services and financial inclusion amongst all demographic groups.
Commenting on the BoG’s plans in an interview with the Business and Financial Times (B&FT) Mr. Takyi-Appiah lauded the management of the central bank for its foresight in ensuring that the Ghanaian economy moves with the changing times.
“I think is a very good thing, basically what they are doing is…if you look at M1MG in terms of cash circulation they are just introducing a digital element of the existing currency. If my understanding is correct, if there’s a one billion cash in circulation, out of that one billion maybe two hundred thousand or two hundred million will be digital,” he said.
“It will also simply mean that,” he added, “all of a sudden the digital transaction will come into the capital market, coming to the capital market will make the market more fluid…and that means automatically moving us into a 24-hour trading platform.”
The e-cedi and how it’ll come by
According to the BoG, in a July 2021 press release, the introduction of the e-cedi would be carried out in three phases—design, implementation and pilot.
In the design phase, all framework parameters for the digital currency pilot would be specified and defined. “These include economic, regulatory and technical requirements of the country as well as the definition of the parameters for the test phase.
“In accordance with these individual requirements, G+D’s CBDC solution would be adapted for the Ghanaian context in the second phase. In the pilot phase, a user group of diverse demographic and socio-economic backgrounds will test the solution in the field using different channels and form factors such as mobile apps and smart cards,” the release stated.
A study would then be conducted Over the course of the pilot project on the acceptance of the e-Cedi from the end users’ perspective. In addition, the IT security of the infrastructure, impact of the project on monetary policy and payment system, and the legal implications would be evaluated, said the release.
The last phase which is the insights from pilot user experiences would provide the BoG and G+D with valuable lessons for a nationwide rollout of the e-Cedi.