- The Central African Republic has announced plans to introduce a Central Bank Digital Currency in the 3rd quarter of 2022
- The currency to be known as the Sango will join a short list of African Central Bank Digital Currencies in operation when it launches
- The Central African Republic became the second country in the world to adopt bitcoin as legal tender, after El Salvador
The Central African Republic, which shocked many including its central bank when it adopted Bitcoin as legal tender, has announced plans to introduce a Central Bank Digital Currency in the 3rd quarter of 2022. The currency to be known as the Sango will join a short list of African Central Bank Digital Currencies in operation when it launches.
The Central African Republic has forged ahead in the face of criticism from many corners about its stance on cryptocurrency and now a Central Bank Digital Currency will form their next step. While many African countries are exploring CBDCs, few have been brought to the table thus far.
- The CAR adopted Bitcoin as legal tender
- They will join Nigeria as the second African country to unveil CBDC
- CAR continues to lead the way in digital currency adoption
The Central African Republic became the second country in the world to adopt bitcoin as legal tender, after El Salvador. CAR’s announcement and adoption came as a surprise to many stakeholders. Both the International Monetary Fund and World Bank expressed concerns over matters of money laundering and funding for terrorism with the move.
The Central Bank of African States (BEAC) is a Central Bank for the six countries using CFA Franc as their currency. They too were surprised by the CAR’s decision to bring cryptocurrency into law and have taken every opportunity to make their disdain for the move by the CAR known. Their fear is the risk of destabilising the monetary union.
Central Bank Digital Currency the “Sango” on the way
Now the CAR has announced plans to forge forward with the launch of a CBDC, the Sango. Its launch is slated for the 3rd quarter of 2022. Details on the Central Bank Digital Currency are scant for now but the belief is that it will allay some of the fears over the adoption of Bitcoin.
It also suggests that the Central African Republic is preparing for a life away from the CFA Franc monetary union. The CFA Franc monetary union has a contentious past with France benefitting from policies more than the countries that use the CFA Franc.
The Sango will be a case study for other countries considering CBDC
With Nigeria’s eNaira the only operational central bank digital currency in Africa, the CAR will become the second African country to launch a CBDC if all goes to plan. The eNaira, operating as a digital version of the Naira has not faired well. Its adoption by the citizenry of Nigeria is low owing to it facing the inherent problems of the Naira. This puts the CAR’s plan to launch a CBDC in very much uncharted waters.
Ghana and South Africa currently have CBDCs in the pilot phase with the eCedi and ‘Project Dunbar’ respectively. According to the International Monetary Fund Eswatini, Kenya, Rwanda, Tanzania, Mauritius, Madagascar, Namibia, Zambia and Zimbabwe are all working on introducing their CBDCs shortly and may take a leaf from the CAR’s Sango when it is launched.
While opposition to it is plenty the CAR has forged on with the adoption of digital currency. The usual questions over internet adoption have been posed, the CAR had an internet penetration rate of just 7.1% in January 2022 before adopting Bitcoin as legal tender in April 2022.
Nigeria reportedly has an internet penetration rate of 42.27%. So the CAR’s Sango has its work cut out for it to make it as currency. President Faustin-Archange Touadera maintains that digital currencies are the key to tackling financial exclusion in the country given the cost of opening and maintaining bank accounts for citizens.