The Central Bank of Ghana (BoG) has announced its intention to issue the eCedi into the Ghanaian system.

eCedi is the digital version of the Ghanaian currency, which will have the same value as the physical currency.

According to the central bank, it is currently analysing the pilot data to map up the strategy for the next steps of the eCedi project.

BoG Governor, Dr. Ernest Addison, who disclosed this, noted that the initiative formed part of the bank’s agenda to promote innovative and affordable digital financial services as a means to expanding financial inclusion and encouraging the use of digital payment as an alternative to cash.

The eCedi, he said, was designed to enhance operational efficiency and cost-effectiveness in payments, to provide a safe, secure, and trustworthy alternative to privately issued digital currencies.

Speaking at the Ghana FinTech Awards held recently in Accra, Dr. Addison reiterated the central bank’s commitment to continue working with FinTechs to ensure that financial services were provided to all Ghanaians, regardless of one’s income or location, by encouraging and providing a conducive regulatory environment.

“Indeed, a lot has been done by FinTechs in collaboration with banks and SDIs in these areas. For instance, collateral-free and instant digital micro loans have become an important source of funding for micro businesses.”
Dr. Ernest Addison

The BoG Governor indicated that the absence of elaborate paperwork, coupled with the flexibility and convenience of round-the-clock access, enhanced the appeal.

“By using alternative data, such as social media and mobile phone usage, FinTechs can assess the creditworthiness of loan applicants in new ways and enable persons who could not obtain loans for lack of collateral to do so.”
Dr. Ernest Addison

However, Dr. Addison communicated that a lot was needed to be done with the interventions so as to be impactful.

“With a technologically savvy youth, the future of digitally enabled financial inclusion looks promising. But it must start now with solutions tailored to their needs.
“Addressing the financial inclusion needs of the youth amounts to investing in the future of a financially literate generation that can be tapped into for accelerated and inclusive economic empowerment.”
Dr. Ernest Addison

Significance Of eCedi To Stakeholders

The digital currency, according to BoG, when issued by the central bank and accepted in the relevant jurisdiction as legal tender would provide great benefits to the users.

BoG believes the aspects of the eCedi will promote its usage from the consumer perspective to all stakeholders.

For consumers, the Central Bank Of Ghana disclosed that the simplification of access to and usage of a digital form of cash, will engender competition and ultimately make it easy for service providers to deliver more consumer-centric innovative products and services.

In line with banks, although the central bank digital currency (CBDC) carries a potential risk of shifts from deposit money to digital currency, BoG assured that the eCedi when implemented will complement, preserve and strengthen the existing role of commercial banks as financial intermediaries and key service providers to consumers.

“The efficiency gains from the entire financial sector operating with a digital form of cash are expected to translate into a lower cost of service delivery.”
The Central Bank of Ghana

Commenting on Fintechs (Mobile money operators and non-bank financial institutions) such as microfinance institutions, rural and community banks, savings and loan companies, finance houses, finance and leasing companies, remittance companies, and credit unions, BoG indicated that the combined use of their services has been higher among the typically excluded population and have contributed the most to financial inclusion.

The eCedi ecosystem, according to the central bank can further boost financial inclusion by potentially curing existing pain points, specifically, liquidity challenges with deferred net settlement of mobile money interoperability transactions. It is also expected to open new opportunities for FinTechs such as providing wallets, applications, and other services.

Touching on merchants’ activities, the Bank of Ghana designated that eCedi as an additional instrument for retail payments will bring competition to the Ghanaian payment ecosystem thus leading to lower merchant fees. “The simplification of the payment chain has the potential of reducing the cost of payments for merchants,” it added.

Not limited to that, BoG stipulated that the government also stands to benefit from the eCedi implementation.

“The implementation of the eCedi would benefit government’s ‘Digital Ghana Agenda’ sufficiently by introducing possibilities for innovative services such as automated payments from customers to the Government (customs, fees, etc.), Programmable social welfare payments, Transparent taxation.
The Central Bank of Ghana