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The IMF published a Fintech Note on key findings from the Sub-Saharan Africa CBDC and Digital Payments Survey, shedding light on the motivations, benefits, and challenges of CBDC adoption, as well as the developments of digital private money and crypto assets in sub-Saharan Africa. More than 75% of the 33 central banks surveyed are engaged in-or are planning to engage in-CBDC research or pilot activities. Of these, roughly two-thirds are in the research phase, and slightly over one-third are planning to conclude their CBDC pilot programs within the next two years. More than a quarter are actively preparing to launch a CBDC by 2028, although legal challenges pose major hurdles to getting to that point. Financial inclusion, efficiency in domestic payments and facilitating remittances are the most dominant motivations for CBDC adoption. Fast payment systems and e-Money (such as mobile money) are considered as quick wins in sub-Saharan Africa, and about two-thirds of countries are in the process of implementing or considering fast payment systems that are mostly accessible through mobile phones or the internet.

The State of Instant and Inclusive Payment Systems in Africa (SIIPS) report is an AfricaNenda's initiative together with the World Bank and the United Nations Economic Commission for Africa. The SIIPS report aims to inform payment actors in Africa and beyond about the developments in the instant retail payment system (IPS) ecosystem on the continent. This first edition highlights the current landscape of instant payment systems, including an assessment of the inclusivity of such systems, through their accessibility to all end-users, their capacity to ensure fair access and design input opportunities for all licensed payment providers. The report also dives into end users' experiences pointing to the fact that IPS are still far from meeting all consumers' payment needs.

The Bank for International Settlements (BIS) published a paper that analyses the development, motivations and concerns of central bank digital currencies (CBDCs) in Africa. While all of those surveyed are analyzing CBDCs, only few have projects at advanced stages (pilot or live). Some countries, in particular in East and West Africa, stand out as promoting fast payment systems through mobile money, but half of the surveyed central banks think that CBDCs can provide a superior solution. A key motivation for African central banks is achieving greater payment system efficiency. In addition, a higher proportion than in other regions see potential benefits for monetary policy, an important consideration for a region where the transmission mechanism is weak. Central banks in Africa also place more emphasis on financial inclusion. At the same time, they are more worried than other regions about cyber security risks and cross-border spillovers and are also concerned about high operational burdens... And speaking of high operational burdens,  only just over 40% of respondents favored a two-tier business model, with the central bank at the core, but private agents (banks and payment service providers) interacting with users (e.g., performing customer onboarding, including KYC/AML functions). Almost all central bank CBDC explorers I follow have dismissed the direct model in which the central bank does all of the "donkey work". However, it should be noted that almost all of the other 60% or so of respondents were simply undecided about the business model at this point. The preference for a two-tier model is strongest among central banks for which financial disintermediation is a top concern. Bringing banks - and other PSPs - on board would encourage them to accept CBDCs. A two-tier model would facilitate collaboration and potentially draw on synergies with the private sector.

With 21% of adults in the region having a mobile money account, Sub-Saharan Africa is the global leader in the use of mobile money. This correlates with GSMA supply-side data on mobile money, which shows that Sub-Saharan Africa plays host to almost half of all mobile money registered accounts i.e. 396 million - of which 37% are active on a 90-day basis.

In our last post, we explored mobile money as the driving force for financial inclusion in Sub-Saharan Africa, and the increasing digitisation of use cases across different sectors - many of which were not imagined in the early days of mobile money. This post focuses on the future of mobile money. Looking ahead, we see three key areas of future growth in mobile money across Sub-Saharan Africa.

The number of African fintech startups grew from 311 in 2019 to 564 in 2021, and accounted for 61% of the $2.7 billion deployed across Africa in 2021, according to a MasterCard study. While its share of global fintech funding is just over one percent, the continent's fintech sector still recorded one of the highest year-on-year growth rates globally. Nigeria, which is home to some of the continent's fintech unicorns, was not only the leading fintech hub in Africa, but across the Middle East and Pakistan. https://newsroom.mastercard.com/mea/press-releases/fintech-emerging-as-africas-most-vibrant-sector-finds-mastercard-study/

The South African Intergovernmental Fintech Working Group (IFWG) launched 'Project Khokha 2' to explore the use of tokenised money, blockchains and wholesale central bank digital currency (CBDC) in South Africa. The CBDC will use R3's Corda enterprise blockchain, and the settlement token and debenture will use a variant of Cosmos blockchain interoperability solution. Accenture will be responsible for tokenizing the wholesale CBDC on Corda. Block Markets Africa will help with distributed ledger technology, tokenizing the bonds and the wholesale payment token using its custom Cosmos-based solution. And Deloitte will document the insights. Other participants in the trials will include commercial banks Absa, FirstRand, Investec, Nedbank, and Standard Bank, the Johannesburg Stock Exchange (JSE), and Strate, South Africa's central securities depository.

The South African Reserve Bank (SARB), Financial Sector Conduct Authority (FSCA), Payments Association of South Africa (PASA) and the Banking Association South Africa (BASA) are jointly communicating to the public that the issuing and the acceptance/collection of cheques will cease, effective from 31 December 2020. https://www.resbank.co.za/Publications/Detail-Item-View/Pages/Publications.aspx?sarbweb=3b6aa07d-92ab-441f-b7bf-bb7dfb1bedb4&sarblist=21b5222e-7125-4e55-bb65-56fd3333371e&sarbitem=10388

One of the key selling points of Facebook's Libra project was that it would prove a boon the world's 1.7 billion-strong unbanked community. Over in Africa, however, the humble mobile phone has been fulfilling such a role for the past 20 years.

"The mobile industry in Sub-Saharan Africa continues to play a crucial role in the response to Covid-19. Mobile operators have implemented measures to support vulnerable communities including offering discounts on mobile tariffs and providing digital content and tools to help people and businesses get online."

Mobile money has become highly prevalent in so-called under- or unbanked areas like the majority of Africa. It enables users to pay for electrical bills and day-to-day shopping with their mobile phone, without the need to connect it to a bank account. The sub-Saharan section of the African continent heavily relies on mobile money, with 548 million registered accounts across 157 providers. North Africa, Europa and Central Asia, only have a combined seven million active mobile money accounts and a transaction value of roughly $15 billion. In 2020, Africans exchanged $490 billion using mobile money providers alone.

On average, it costs 9.3% to send the equivalent of $200 to the Africa according to a new World Bank report. However, the cost drops by as much as 90% when money is sent through cryptocurrency-based fintech companies like Bitpesa.

Big tech has moved into financial services extensively in China. These companies have also been expanding rapidly in other emerging market economies (EMEs), notably in East Africa, Latin America, and Southeast Asia, East Africa. In the UK and the U.S., fintech has more of a share in providing credit than big tech.

Ghana has recently become the fastest-growing mobile money market in Africa, with registered accounts increasing six-fold between 2012 and 2017.

WhatsApp posted a job opening for a public policy manager who would "work closely with Facebook's Africa Public Policy team to ensure blockchain technologies and digital payments can play their part in improving Africa's socio-economic development." The job listing does not mention Libra, "

GSMA Mobile Money and GSMA Intelligence have undertaken a study to assess the impact of mobile money on monetary and financial stability across several countries in Sub-Saharan Africa, something which - to our knowledge - has not been done previously. To achieve this, we looked at trends in a number of monetary and financial outcomes, both in countries where mobile money adoption is widespread and where uptake has been limited.

This article analyzes the current central bank digital currency (CBDC) landscape. A sample of potential candidate countries for establishing a CBDC was selected, motives for implementing a CBDC were collected, and variables were assigned to these motives. Statistical methods were applied to obtain a sample of the countries with the highest correlation with three CBDC "pioneer" countries (Bahamas, China, and Uruguay). The results show that the Baltic Sea area (Lithuania, Estonia, and Finland) is a good CBDC candidate, in South America it's Brazil, and in Asia, China and Malaysia show high correlations with the three pioneer countries. In Africa, South Africa stands out as an optimal area for CBDC implementation.

Bankable, the global provider of "Banking as a Service" solutions, and Visa today announced a strategic collaboration within the Central and Eastern Europe, Middle East and Africa region. Bankable aims to work with Visa to accelerate the digital capabilities of financial institutions', build and launch digital banks, reduce cash usage and increase Fintech sponsorship in CEMEA.

This GSMA report explores the digital ID landscape in selected markets in Sub Saharan Africa, key actors, policy challenges and opportunities, and the potential role of mobile-enabled digital IDs in enhancing service delivery in a socially impactful manner.

The Global System for Mobile Communications (GSMA) released a COVID-19 response tracker that monitors mobile money-specific regulatory policy, government and provider interventions globally, collated using both primary and secondary sources and updated weekly. The tracker is intended to support mobile money providers and regulators with a mobile money-specific policy response database and learnings from other markets, in order to effectively tailor policy responses for their market. The tracker collates data from 32 countries, spread across Sub-Saharan Africa (17), East Asia & Pacific (7), South Asia (4), Middle East & North Africa (3), and Latin America & Caribbean (1). An interim analysis of the data collated in the tracker showed preferred policy response instrument, regional variations, and the validity period of these instruments.