Namibia is taking steps toward launching a central bank digital currency (CBDC) to enhance cross-border payments and promote financial inclusion. However, the Bank of Namibia (BoN) remains in the early stages of exploration, carefully assessing whether a digital currency can effectively address the country’s payment challenges.
The move follows a recent technical assistance mission from the International Monetary Fund (IMF), which has expressed reservations about a rapid rollout. While the IMF supports BoN’s research, it has cautioned against hasty implementation, advising Namibia to strengthen its existing payment infrastructure first. Additionally, the IMF argues that a retail CBDC (rCBDC) may not significantly improve financial inclusion, as the central bank hopes.
Despite this, BoN is pressing ahead with discussions, engaging with central banks in Eswatini, Lesotho, and South Africa to evaluate whether a CBDC could facilitate smoother cross-border transactions. The bank has acknowledged the IMF’s recommendations and is incorporating them into its ongoing feasibility study before making any final decisions.
Namibia first introduced the idea of a digital Namibian dollar in 2022 through a consultative paper on CBDCs. However, progress has been slow, with most developments centered on discussions with regional counterparts rather than concrete action. This cautious approach aligns with the experiences of other African nations that have struggled with CBDC adoption.
Nigeria’s eNaira, launched in 2021, has faced low adoption rates and public skepticism, while Zimbabwe took a different route in 2023 by introducing a gold-backed digital currency to counteract its currency devaluation. Ghana’s eCedi has undergone successful pilot tests but is yet to be widely deployed.
The key question now is whether Namibia will commit fully to a CBDC or take the IMF’s advice and focus on modernizing its current financial systems first. For now, BoN appears to be treading carefully, ensuring that its next steps are well-informed before making any definitive moves.
