DIGITIZING THE ECONOMY: ALL YOU NEED TO KNOW ABOUT GHANA’S E-CEDIS
Ghana just like any other country is experiencing an era where technology has become an economic booster. The adoption of this economic growth sprouter has promoted the efficiency of goods and services which is the key to prosperity.
In terms of digitizing the Ghanaian economy, we will be expecting an economy in which digital computing technologies are used in Economic Activities. In this case, the introduction of the E-cedis.
In 2019, Dr, Ernest Kwamina Yedu Addison, the Governor of the Bank of Ghana, disclosed the need to invent the digital version of the Ghana Cedis. He said that ” The opportunities of digitizing financial services are enormous and can be explored effectively to scale up financial access for Ghana’s economic transformation agenda.”
Dr Addison’s statement is evident by the mass adoption of digital payment in the west-African country.
In just the first half of 2019, the transaction of mobile banking saw a jump of 34% in transaction volumes compared to the previous year. These transactions amounted to 140 billion Ghana Cedis which would probably double by the end of the year.
As a result of banks welcoming mobile banking, it became clear that 80 % of bank patrons would rather go for mobile banks than go for the traditional banking models.
There was also the issue of bitcoin’s liability to change rapidly and unpredictably, especially for the worse. This they call volatility. Dr Addison explained that it was because of volatility that the Bank of Ghana felt the need for a state-backed digital currency such as the e-cedi. But first, what is the E-cedis or the CBDC?
The Central Bank Digital Currency is the digital form of GHANA’S currency(Cedis) that the central bank will issue as electronic coins or an account backed by the government.
In the meantime, the E-cedis is supposed to go through phases that determine its legitimacy to be introduced into the Ghanaian economy.
Phase 1 Of the E-Cedis Project
This phase which has already been completed involves the designing of the electronic currency. The team dedicated to this aspect is said to have done a great job at it.
Phase 2 Of The E-cedis Project
This phase involves the implementation of electronic currency. This is the crucial part of the process where evaluating, deciding, visioning, and planning take place to ascertain the efficiency of this electronic money.
The last phase is the pilot phase. Selected people would be asked to use the E-cedis on their mobile platforms and other favourable platforms that are currently accepted. These people are to use and criticize the E-cedis constructively, to guide the final direction of the product.
Once these stages are done with, the E-cedis is ready to be introduced to the economy immediately, that is if there’s nothing to be changed.
Dr Ernest Kwamina Yedu Addison stated that “You have seen the sharp changes in the valuations of some of these coins, Bitcoin for instance has seen large, large swings in the value of the currency. The basic function of currency is for it to be used effectively as a medium of exchange or even as a unit of account, so when you have a currency whose value is so unstable, you really cannot use it effectively to meet any of the standard functions of money”. The introduction of the Ghanaian E-cedis will not have that effect.
He warned that the E-cedis is a State-backed electronic currency that will perform the functions of money contrary to the volatile cryptocurrencies.
Considering the phases for the E-cedis are almost completed, Ghanaians are hoping that the E-cedis will drop on the market soon enough.
The Bank of Ghana would be the first of African Banks to introduce the electronic version of their traditional currency and that is something to be proud of.
Considering China also introduced its digital Yuan in April, the Ghanaian economy is expecting that the introduction of the E-cedis would bring positive results.
What do you think of the conception of the E-cedis? Comment below and share your views. We’ll love to read from you.