By: Sujha Sundararajan
Ghana’s central bank is deploying hardware wallets and other devices for CBDC.
Notably, around 43% of Ghana’s population does not have access to a bank account. The bank is looking to improve financial inclusion with the use of eCedi.
Bank of Ghana (BoG) has proposed using hardware wallets for its central bank digital currency (CBDC) dubbed ‘eCedi.’ The bank intends to make eCedi available for those who do not have a bank account or even internet access.
In a design paper released on Tuesday, Africa’s largest gold producer said that the digital currency should “compliment” mobile money. According to the central bank, eCedi needs to be as intuitive as possible and seeks to improve financial inclusion.
“eCedi usage has to 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 had designed two types of wallets for its CBDC. Hosted wallets managed by financial institutions will require access to the internet.
According to World Bank data, these hardware wallets work in offline mode, given only 53% of Ghana’s individuals were internet users as of 2019. In January 2021, only 15.7 million individuals had access to the internet from Ghana’s total population of 31.40 million. Around 43% of Ghanaians do not hold a bank account.
Additionally, the banking regulator said that eCedi transactions would be free of additional costs, unlike mobile-money transfers that come with a transactional fee.
Offline eCedi was first introduced in October 2021 through smart cards – physical cards embedded with a chip, similar to debit/credit cards.
Kwame Oppong, head of fintech and innovation at the BoG, emphasized that the offline functionality will enable Ghanaians, who lack reliable access to electricity and internet connectivity, to embrace the country’s CBDC.
Ghana has positioned itself at the forefront of exploring and adopting a CBDC, cryptocurrencies such as BTC, and other digital assets in the West African region.
It quickly follows south-central African nation Zambia in looking into the merits of a CBDC to promote financial inclusion. Zambia said that it is close to finishing research and implementing a CBDC by the end of the fourth quarter.
Nkatya Kabwe, Assistant Director at the Bank of Zambia, told Bloomberg in February,
“The research results will form part of the input in the policy considerations on whether to introduce a central bank digital currency in Zambia”
Besides, eNaira marks the first African CBDC in circulation, issued back on October 25, 2021, 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 when compared to cash.
Growing Ghana’s E-commerce; a catalyst for economic development
By : Stanbic Bank
The fourth industrial revolution, which is wholly anchored on technological advancement and innovation opened up vast opportunities in different areas of economies around the world.
Social, economic, and commercial lives have seen remarkable developments with the rise of the internet, technology, and digitization. In Ghana, the pioneering of mobile money in 2009 has been revolutionary in this regard.
The World Bank has recognized Ghana as the fastest growing mobile money market in Africa over the last 5 years. This growing trend of mobile money penetration has been a catalyst for the booming e-commerce industry in the country. The industry has been growing steadily over the past decade and has evolved over time to become the mainstay for many small and medium scale enterprises (SMEs) in Ghana.
Besides mobile money, several factors have contributed to the emergence of e-commerce in Ghana chief among which is the level of internet penetration. According to Kepois, a social media research organization, internet penetration in Ghana is among the highest in the West African sub-region.
Out of a population of 32.06 million people, 16.99 million (53.0%) are active internet users, meaning that well over half of Ghanaians are on the internet at one point or the other. This is a huge opportunity and many users have taken advantage of this to either start businesses or expanded their businesses to include online channels.
From Instagram to WhatsApp, Snapchat to TikTok, there are millions of Ghanaians, both young and old, using the opportunity to trade in goods and services on these platforms with payments enabled mainly through mobile money and other electronic payment mediums. Online retail outfits have become a core part of the modern Ghanaian lifestyle.
Furthermore, the Ghana Interbank Payment and Settlement Systems (GhIPSS) launched an internet payment gateway to enable holders of domestic Automated Teller Machine (ATM) cards to make payments and purchases online. Subsequently, the launch of the ‘gh-link E-commerce will promote e-commerce and enhance the services needed in the e-commerce value chain.
The benefits of this new trend of doing business are enormous. Digitization and e-commerce have unlocked the entrepreneurial spirits of many Ghanaians, making it a major source of employment and revenue generation avenue for them. Many of Ghana’s young population have found stable employment leveraging the benefits of the internet, mobile money, and apps to unlock new opportunities to connect demand and supply sides of the economy through e-commerce.
E-commerce has also allowed businesses to diversify their offerings and expand their business operations from hitherto fixed operating times to 24/7 operations with increasing productivity and value extraction.
Traditional businesses that hitherto used to conduct business physically have expanded their portfolios of services and products in response to evolving consumer demands through e-commerce. Today, banks, insurance companies, restaurants, and grocery shops have online options that deliver the same, if not better, services to customers and clients with less stress.
In terms of public revenue generation, government becomes a beneficiary through the widening of the tax net to capture businesses operating within this segment. The Ghana Revenue Authority (GRA) has announced that it intends to introduce an e-commerce tax in April this year to rake in some GHS 2.4 billion. When done effectively, this could possibly have a huge positive impact on domestic tax mobilization by the government to bring us closer to the desired tax to GDP ratio of our peers.
To fully realize the benefits of e-commerce in Ghana, however, the government must dialogue with other stakeholders, to shape e-commerce and the digital economy by defining the rules that shape and govern the sector. This is a huge challenge that will involve adapting existing policies, laws, and regulations to cater to this emerging and growing trend of e-commerce in Ghana.
