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<p>Central Bank Digital Currencies (CBDCs) are digital versions of cash issued and regulated by central banks. They represent digital versions of your national currency. While these technologies present a pathway to inclusive and efficient economic systems, government policies are the motor to the destination.</p><p>The African Continental Free Trade Area Agreement (AfCFTA) signed in 2018, is an ardent indication of the efforts being made to ease the cost of Intra-African trade with the projection to create a single African market of over a billion consumers; reaching a total GDP of $3 trillion. If Africa must drop “Emerging” from its economic definition, these policies must be paired with complementary technologies.</p><p>A recent Bank for International Settlements (BIS) study showed a surge in central bank exploration of Central Bank Digital Currencies (CBDCs). By 2021, a whopping 90% of surveyed central banks were actively researching or developing CBDCs, up from 66% in 2017. Pilot projects doubled, with 26% of central banks experimenting with real-world implementations.</p><p>While this progress is exciting, achieving regional economic prosperity and sustainability requires collaboration and alignment among stakeholders.</p><h2 id="header-0">Same direction &#43; Different routes &#61; Same destination?</h2><p>Countries developing CBDCs have listed: better financial inclusion, better monetary policies, and lower cash distribution costs; among the many reasons for developing CBDCs. These reasons point to the numerous developments of retail CBDCs in the continent. In a region with existing/ growing electronic retail payment systems; Retail is an under-utilization of the technology and solves a “non-problem”.  The argument is this: CBDCs do not target the unbanked; at the retail level: it is an overutilization of a technology that can do much more.</p><p>Cite data for the growth of instant payment systems in Africa here. Ironically this is both an under-utilization and over-utilization of CBDC.</p><h2 id="header-1">The Ideal Destination (Project Jura)</h2><p>A major economic challenge in the continent is the const of intra-continental trade. A problem that is magnified by the need for third-party currencies as a means of trade settlement. This need compounds the fragmentation of liquidity in the region.CBDCs present an opportunity for emerging economies through blockchain technology to catch up to their more-developed counterparts and unlock economic growth.</p><p>An outstanding model by Banque de France and the Swiss National Bank is the Jura Project.</p><p>Jura explores the direct transfer of euro and Swiss franc wholesale central bank digital currencies (wCBDCs) between French and Swiss commercial banks on a single DLT platform operated by a third party. Tokenized asset and foreign exchange trades are settled safely and efficiently using payment versus payment (PvP) and delivery versus payment (DvP) mechanisms.</p><h2 id="header-2">Final thoughts</h2><p>Wholesale CBDCs should take the main stage, even better: DeFi  (decentralized finance) models can always be implemented for self-sustaining and governance of these systems.   Author Bio:Nwachukwu Emmanuel Community Manager at Canza finaEmmanuel is the Community Manager at Canza Finance, with years of experience in managing and growing Communities and building customer-focused relationships. He was formerly a lead analyst at Tiphub Africa, A US-based investment firm focused on investing and accelerating African-focused startups and founders. Emmanuel also has a deep understanding as a software engineer. Having worked at the intersection of Web3 and Venture capital, he has extensive knowledge of people-focused relations and operations. At Canza, he is pioneering the bridging of traditional financial services and DecentraliFinance by building the core Web 3.0 Infrastructure for<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdEjW3zKCgzkkM-5BbruCjFY4zXIoLLj43spGVKTGQ2-KhMmunhABUhivhynF-obKjKwEa1dcYxjCtlHvDj1ffnEq9Zt35nF4BItVrP5t3YwcFGElxCUYR7gVjD1dV1Wt_j-K5zuN2k1niFfCR45eMgriQ?key&#61;CSSaNRz04KKsMUqRfhstBw" /></p><p>Canza Finance: Website, X (twitter),  Nwachukwu Emmanuel: X (twitter)</p>

Is Africa missing the mark with Retail CBDCs?

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