Tanzania Follows Nigeria Footstep As It Prepares To Launch Its Central Bank Digital Currency CBDC
Tanzania has reportedly started exploring a Central Bank Digital Currency (CBDC). The country is following the footsteps of Nigeria, which launched its own digital currency last month. Other African countries have similarly announced plans to launch CBDCs.
Tanzania Explores CBDC
According to a Bloomberg report on Friday, Bank of Tanzania Governor Florens Luoga announced the country’s CBDC plans on Thursday at the 20th Conference of Financial Institutions (COFI).
“To ensure that our country is not left behind the adoption of central bank digital currencies, the Bank of Tanzania has already begun preparations to have its own CBDC,” he said.
Consequently, the governor said that the central bank is also looking to expand research into digital currencies and strengthen the capacity of its team.
Luoga said this move was inspired by Nigeria’s launch of its own CBDC, the eNaira, last month. Nigeria partnered with a German FinTech to launch a digital currency to complement the physical naira. The West African country is the second to officially have a CBDC after the Bahamas, which launched its own last year.
The governor also said that the central bank is planning to diversify its foreign exchange reserves. To this end, it will buy gold from local refineries. “The monetary gold that we plan to buy should have a purity of not less than 99.5%,” he said. He also expects the country’s inflation rate to remain within the targeted range of 3% to 5% in 2021-22.
Luoga added that the central bank is still cautious of cryptocurrencies. And he reminded the public about its illegal status in the country, urging them to be wary of investing.
Since 2019, cryptocurrencies have been banned in Tanzania after the central bank said they were not recognized by law. However, this may soon change as the Bank of Tanzania is reportedly working to reverse this ban. This development is a result of the Tanzanian President Samia Suluhu Hassan asking the central bank to prepare for cryptocurrencies shortly after she became president.
Digital Currency Development In African Countries
More and more governments are exploring central bank digital currencies in their countries. In Africa, CBDC adoption is gradually growing.
Nigeria was the first African country to launch its CBDC. Other African countries are also researching potential opportunities that CBCDs provide for their economies.
About two months ago, the Managing Director of the International Monetary Fund(IMF), Kristalina Georgieva, said that over 110 countries are at some stage of exploring CBDCs.
The Bank of Ghana has said it will soon launch its CBDC. While other countries like South Africa, Zimbabwe, and Namibia are still exploring the technology’s feasibility.