Senegal adopts national currency

Senegal, the West African country, has recently created a cryptocurrency that’s based on its national currency. The currency’s digital name, eCFA, is similar to its tangible counterpart, the CFA Franc, and will be the first digitized legal tender. Senegal’s eCFA was created out of a collaborative effort between the Banque Regionale De Marches (BRM), a bank specializing in West African banking and capital markets, and eCurrency Mint Limited, a Dublin-based company that enables central banks to issue digital fiat currency, called eCurrency.

The BRM will issue the eCFA digital currency in agreement with e-money regulations of the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO). This central bank serves the eight West African countries who share the CFA Franc currency, and together comprise the West African Economic and Monetary Union (WAEMU). Consequently, the eCFA will be regulated and issued by a central banking system but tracked on the blockchain. After Senegal, the WAEMU will introduce the eCFA in Cote d’Ivoire, Benin, Burkina Faso, Mali, Niger, Togo, and Guinea-Bissau. Senegal’s push toward more progressive technologies shows that Africa is one of the leading continents in the realm of innovative Fintech solutions.

In 2007, M-Pesa, a mobile phone-based money transfer, financing and microfinancing service, met the need for financial inclusion by allowing Kenyans to deposit money into accounts stored on their cell phones, make transactions using PIN-secured SMS text messages for goods and services, and redeem deposits for regular money. Since then, similar projects were created in Tanzania, Afghanistan, South Africa, India, Eastern Europe, and a number of other markets.

In late 2015, Tunisia became the first country to offer a national digital currency for transmission built on a blockchain. This blockchain was created by Monetas, a software company that focuses on advanced financial and legal services for consumers and businesses. Monetas CEO, Johann Gevers, commented on what Tunisians can expect from the Monetas system:

“The Monetas deployment in Tunisia is the first application for a full ecosystem of digital payments. With the La Poste Tunisienne Android application powered by Monetas, Tunisians can use their smartphones to make instant mobile money transfers, pay for goods and services online and in person, send remittance, pay salaries and bills, and manage official government identification documents.”

In early November, the South African Reserve Bank (SARB), the Payments Association of South Africa (PASA), the Financial Services Board (FSB) of South Africa, Strate, and some of Africa’s major banks successfully managed to circulate a smart contract on a private Ethereum chain. This action came after discussion amongst the banks in early July 2016, and after ABSA, a subsidiary of Barclays Africa, joined the international R3 Blockchain Consortium.

It is reported that the financial service organizations involved have developed and tested a blockchain solution for distributing syndicated loans via Ethereum-based technology. The suggested blockchain solution for syndicated loans will be valued in cryptocurrency but associated with legal tender. As a result, banks will be able to form collectives and trade on an electronic exchange with smart contracts. It is suspected that the new blockchain solution will bring transparency to the financial markets, create shorter settlement times, and lower transaction costs.

Blockchain technology continues to emerge in industries across the world and has been a catalyst for innovative fintech concepts. Africa’s experimentation of the blockchain technology will help foster its economies and shows a progressive attitude that could potentially attract more innovators to the highly populated continent. It could be expected that once these projects gain traction, the doors will open for more blockchain based digital currencies and developments that will bring rise to the next generation of blockchain entrepreneurs.

Dan is a Los Angeles-based musician, writer, and veteran passionate about science and technology, current events, human rights, economic impacts, and strategic calculus.
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