Namibia is marching on with its retail central bank digital currency (CBDC) project despite skepticism from the International Monetary Fund (IMF), which called on the country to explore other digital finance options.
The Bank of Namibia (BoN)’s director for international relations, Kazembire Zemburuka, revealed this week that the bank is in the “preparation phase” of the digital Namibian dollar project. It primarily targets financial inclusion and improving cross-border payments with the CBDC.
BoN is currently exploring whether Namibians would embrace retail and wholesale CBDCs, the challenges and risks they would pose, and what features the people most desire from a potential digital currency, Zemburuka stated, as reported by local media outlets.
The central bank says it’s partnering with dozens of stakeholders in its project, including the International Monetary Fund. However, a mission from the Washington financier conducted its own study in January and, in its report, dissuaded the top bank from launching a digital currency.
“As the mission did not find a strong support for rCBDC issuance to address gaps in payments, it recommends against pursuing advanced technological exploration beyond proof-of-concept until tangible benefits of CBDC for payments are evident,” IMF said.
The IMF report recommended that the BoN explores how it can improve existing digital payments. It also called on the regulator to provide easier policies encouraging financial inclusion in the Southern African nation.
BoN understands that a digital dollar can’t solve all the country’s financial challenges, such as poor infrastructure and low financial literacy. However, Zemburuka said it still has a role to play in delivering better financial services to Namibians.
“Despite challenges, like integrating CBDC with NamPay and IPS, BoN views CBDC as a valuable digital payment option. The bank is committed to addressing macro-financial risks related to liquidity, market rates, and foreign exchange reserves,” he commented.
Beyond the IMF, BoN is partnering with neighboring central banks, including the South African Reserve Bank and the Bank of Lesotho, on the project, with cross-border CBDC payments at the top of the agenda.
Namibia joins other African nations exploring digital currencies to boost financial inclusion. Ghana expects to launch its digital cedi this year after years of research, while its neighbor, Nigeria, launched its eNaira years ago. However, Africa’s first CBDC was poorly received, and other countries seek to avoid similar fates for their digital currencies.
Watch: CBDCs are more than just digital money
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