Several sub-Saharan African central banks are exploring or in the pilot phase of a digital currency, following Nigeria’s October introduction of e-Naira.
Nigeria was the second country after the Bahamas to roll out a Central Bank Digital Currency (CBDC).
CBDCs are digital versions of cash that are more secure and less volatile than crypto assets because they are issued and regulated by central banks.
As the chart shows, South Africa and Ghana are running pilots while other countries are in the research phase.
The South African Reserve Bank is experimenting with a wholesale CBDC, which can only be used by financial institutions for interbank transfers, as part of the second phase of its Project Khokha.
South Africa is also participating in a cross-border pilot with the central banks of Australia, Malaysia and Singapore.
The Bank of Ghana, by contrast, is testing a general purpose or retail CBDC, the e-Cedi, which can be used by anyone with either a digital wallet app or a contactless smart card that can be used offline.
Countries have different motives for issuing CBDCs but for the region there are some potentially important benefits.
The first is promoting financial inclusion. CBDCs could bring financial services to people who previously didn’t have bank accounts, especially if designed for offline use.
In remote areas without internet access, digital transactions can be made at little or no cost using simple feature phones. CBDCs can be used to distribute targeted welfare payments, especially during sudden crises such as a pandemic or natural disaster.
They can also facilitate cross-border transfers and payments.
Sub-Saharan Africa is the most expensive region to send and receive money, with an average cost of just under 8% of the transfer amount.
CBDCs could make sending remittances easier, faster, and cheaper by shortening payment chains and creating more competition among service providers. Faster clearance of cross-border payments would help boost trade within the region and with the rest of the world.
There are risks and challenges that need to be considered before issuing a CBDC, however. Governments will need to improve access to digital infrastructure such as a phone or internet connectivity. While the region has made significant strides, more investment is needed.
More broadly, central banks will need to develop the expertise and technical capacity to manage the risks to data privacy, including from potential cyber-attacks, and to financial integrity, which will require countries to strengthen their national identification systems so know-your-customer requirements are more easily enforced.
There is also a risk that citizens pull too much money out of banks to purchase CBDCs, affecting banks’ ability to lend. This is especially a problem for countries with unstable financial systems.
Central banks will also need to consider how CBDCs affect the private industry for digital payment services, which has made important strides in promoting financial inclusion through mobile money.
Singapore’s launched a project to build the biggest automated container port by 2040
As economies struggle to untangle unprecedented congestion in global supply chains, one of the world’s busiest ports is backing an ambitious modernization plan to provide solutions.
A decade ago Singapore launched a project to build the biggest automated container port by 2040 — one that will double the existing space and cut back on manpower using drones and driverless vehicles. Operations started at two new berths last year, and construction work is continuing on the next phase.
The plan, set in place long before the onset of supply-chain upheaval, now appears prescient. Shipping experts say Singapore handled the most trans-shipped cargo in the world in 2020 and is adding new capacity at a time when the growth of ports is slowing.
Ports are the most visible choke points in the $22 trillion arena for merchant trade, making it more urgent to find solutions as the pandemic rewires global supply chains.
Gateways for seaborne trade in the US and Europe are currently struggling to handle cargo flows smoothly and quickly, creating bottlenecks that’s blamed on everything from labour shortages to uneven patterns of demand.
Exporters in Asia face delays getting goods transported to customers in the US and Europe, and the situation has only worsened this year with renewed Covid lockdowns in China and the war in Ukraine.
While Singapore’s geographical location in the Strait of Malacca means it doesn’t have some of the burdens faced by end-destination ports, and the government has influence over trade unions that many other nations can’t copy, its expansion plans offer a possible way forward.
Great new infographics from the Hinrich Foundation research team on why we trade and the benefits of globalisation.
Below are a few and useful extracts.
It is not all doom and gloom – or moonshine and roses – but what is true, is that if we collaborate, the world is a better place – for more people than not.