Tanzania joins the race to launch a Central Bank Digital Currency (CBDC)

CBDC Launch in East Africa

“The Bank of Tanzania has already begun preparations to have its own CBDC”, reported Prof Luongo, the country’s Central Bank Governor, in a Finance Conference at Dodoma. He, however, did not indicate any timelines to launch or the stage in which the country is developing and implementing a CBDC. This surprises many economists, citing the research interest and developing a CBDC as a reactive move to Nigeria launching e-naira and Kenya’s very advanced stage towards its own CBDC. In the current 2022 CBDC tracker, Tanzania is not reported as having any interests or being in any stage of launching a CBDC, other African countries detailed in the tracker include; 

  • Kenya – The research phase
  • South Africa – Pilot phase
  • Nigeria – Launched a CBDC
  • Senegal – Canceled
  • Ghana- The research phase
  • Morocco – The research phase
  • Tunisia –The research phase
  • Egypt – The status is inactive
  • Rwanda – The research phase
  • Madagascar- Research Phase

In an article written in coindesk, the President of Tanzania, Samia Suluhu, urged the Central bank to start working on the development, be ready for changes, and not be caught unaware of the technological advancements in other parts of Africa. She also noted that this route was not familiar and was unaccepted throughout Tanzania. What would the launch of a Tanzanian CBDC mean to Tanzanians, the East African Community and Africa as a whole? As a point of observation, Tanzania is the second largest country in East Africa, has a population of 59.73 million and a GDP per capita of USD 1,076.47, ranking the country 10th in GDP nominal in Africa. These numbers mean that Tanzania is a growing economy and is an important aspect of the country’s pursuit to launch a CBDC. Tanzania is also a member of the East African Community, whose headquarters are based in Dodoma, Tanzania. As a member of the East African community, this is a much-awaited move, with investors seeking to find out the expected launch dates.

A digital currency would mean that approval for government projects funded by the East African Community (EAC) will take less time as the bureaucratic approval process will be eliminated, and funds will reflect in various accounts immediately. Secondly, as the EAC secretariat seeks to have a common currency, having an already existing infrastructure will lessen the implementation time of the common East African currency and adoption of the same. The digital currency will boost tourism, the country’s largest foreign exchange earner. Tourists can book travel, pay via P2P platforms and avoid incurring extra transaction costs. The country will also be able to trade and earn higher returns from its gold exports. As many African countries move to the research phase of the new world of digital cash, Tanzania should formalise its quest to develop it. They need to do this by having their current status or milestones achievements recorded in the global central bank digital currency tracker. This will ensure accountability, present a good platform to learn from other countries that have moved to the implementation phase and, most importantly, motivate the Tanzania Central bank to implement its digital currency faster.

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