Towards the end of last year, a regional bank for francophone west Africa, Banque Régionale de Marchés (BRM), issued a digital currency in Senegal (which it initially dubbed the eCFA but has since decided to rename). It acts similar to other digital currencies and consumers can interact with it across existing payment platforms, such as electronic and mobile wallets. It is an experiment which authorities are monitoring closely and, if considered successful, it could be rolled out in the eight member countries of the West African Economic and Monetary Union (WAEMU) to operate alongside the region’s hard currency, the CFA.
But what makes it so unique is that, unlike other digital money solutions out there, it could become the region’s digital fiat currency. In other words, it could potentially become legal tender backed by a central bank.
Digital money – a monetary exchange based on technology, unlike physical cash such as banknotes and coins – are nothing new in Africa and come in many forms. One is mobile money, which evolved from the stored value of airtime. Today it allows many Africans to store, transfer and make payments using their mobile phones and without requiring a bank account. Safaricom’s M-Pesa – used by over 70% of the Kenyan population – is the most successful example of mobile money, but other telcos (Airtel, MTN and Tigo) have followed suit with their own platforms..