Namibia Explores CBDC to Enhance Cross-Border Payments and Financial Inclusion

Namibia is exploring the possibility of launching its own central bank digital currency (CBDC) to improve cross-border payments and boost financial inclusion. The Bank of Namibia (BoN) is still in the early stages of assessing whether a CBDC would effectively address the country’s payment challenges, following a recent technical assistance mission from the International Monetary Fund (IMF).

Despite supporting BoN’s research, the IMF has advised against rushing into a full-scale rollout. Instead, it recommends that Namibia focus on strengthening its existing payment infrastructure before navigating the complexities of a digital currency. The IMF also questions whether a retail CBDC (rCBDC) would significantly enhance financial inclusion as Namibia hopes.

Nevertheless, BoN remains committed to its CBDC exploration and is actively engaging with central banks in Eswatini, Lesotho, and South Africa to examine the potential benefits for cross-border transactions. The bank is taking the IMF’s recommendations into account, refining its approach before making any final decisions.

Namibia first introduced the idea of a digital Namibian dollar in 2022, releasing a consultative paper on CBDCs. Since then, progress has been slow, with ongoing discussions among regional central banks about possible use cases. The cautious approach appears justified, given the mixed experiences of other African nations with CBDCs.

For instance, Nigeria’s eNaira, launched in 2021, has struggled to gain widespread adoption. Meanwhile, Zimbabwe opted for a gold-backed digital currency in 2023 to counteract the rapid devaluation of its local currency. Ghana has been developing its eCedi for years but has yet to move beyond pilot programs.

As Namibia deliberates its next steps, the key question remains: Will BoN proceed with a full-scale CBDC rollout, or will it heed the IMF’s advice and focus on improving existing financial systems first? For now, Namibia is taking a measured approach, carefully evaluating its options before committing to a major decision.