Sub-Saharan Africa CBDC considerations TAB L E 3 Consideration Description Connectivity Connectivity issues, limited digital infrastructure and cybersecurity concerns pose significant hurdles to the widespread adoption of CBDCs in the region. Approximately 45% of Africa’s population is further than 10km from fibre network infrastructure, which is a higher percentage than on any other continent.28 Mobile money adoption Sub-Saharan Africa has experienced significant growth in mobile money services, such as M-Pesa in Kenya.29 CBDCs can build on this existing mobile money infrastructure, integrating with mobile wallets and leveraging the familiarity and widespread use of these services to facilitate CBDC adoption. Informal economy integration Informal economies are prevalent in Sub-Saharan Africa, nearly 85% of employment in Sub-Saharan Africa is informal, with a substantial portion of economic activity occurring outside formal systems.30 CBDCs can aim to bridge the gap between the formal and informal sectors by providing digital payment solutions that cater to the needs of informal businesses and individuals, enhancing financial inclusion and fostering economic growth. Addressing currency volatility Some countries in Sub-Saharan Africa experience significant currency volatility, which can have adverse effects on economic stability and international trade.31 CBDCs could incorporate features to mitigate currency volatility. Financial inclusion Sub-Saharan Africa has a high proportion of unbanked populations. Therefore, one of the primary priorities for CBDC in the region is to promote financial inclusion by providing access to digital financial services for individuals who are currently excluded from the formal banking system and would like to engage in the banking system. CBDCs can use existing mobile payment infrastructure to reach remote areas and underserved populations. Remittances The region has a substantial volume of cross-border trade and remittance flows.32 CBDCs could reduce the number of intermediaries, the costs associated with those intermediaries and improve transparency around remittance status, thus reliance on traditional remittance channels. Sub-Saharan Africa CBDC priorities: Motivations for issuing a CBDC in Africa F I GUR E 4 Better financial inclusion More effective monetary policy Increased competition and efficiency Lower cash distribution costs Enabling peer-to-peer payments Programmable money Tackling AML, tax avoidance Better privacy Percentage of participiating central banks2 Fostering financial inclusion is one of the main motivations for CBDCs in Africa1 Benefits of CBDC 0 20 40 60 80 Central bank digital cash Ranked 1st: Ranked 2nd or 3rd: African survey EMEs survey Source: BIS, Central bank digital currencies in Africa, 2022, www.bis.org/publ/bppdf/bispap128.pdf. Notes: 1. Each bar indicates the percentage of central banks that choose a given motivation as one of their top three benefits of CBDC 2. Unless otherwise stated, the percentage is computed over all the central banks that participated in the surveys (19 and 24 central banks in the African and emerging market economies (EMEs) survey, respectively), induding those that did not answer the specific question. Central Bank Digital Currency Global Interoperability Principles 12
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