tl;dr
Rwanda is advancing its digital franc CBDC initiative by launching a retail CBDC ideathon to gather ideas from the public, aligned with its National Fintech Strategy (2024-2029). The Central Bank of Rwanda is conducting closed-loop tests focusing on legal, cybersecurity, and payment integration aspe...
Central bank digital currencies (CBDCs) may have lost global momentum, yet Rwanda is pushing ahead with its digital franc initiative. The Central Bank of Rwanda (BNR) has launched a retail CBDC ideathon, inviting citizens, companies, startups, and corporations to contribute ideas to help craft the country’s digital payments future. This move aligns with Rwanda’s National Fintech Strategy (2024-2029), emphasizing innovation and competition within the digital finance ecosystem. Participants have until mid-August to register and until mid-September to submit proposals, with winners announced by the end of September.
Unlike many African countries that have cooled on CBDCs, Rwanda remains committed, conducting closed-loop tests with a limited group of users including bank staff, lenders, merchants, and institutions. These trials focus on legal frameworks, cybersecurity, and payment system integration, with results expected by early October. The bank stresses that testing does not guarantee a launch but will inform future steps.
BNR has identified over a dozen potential benefits of the CBDC, zeroing in on four key areas: enhancing payment system resilience through offline and USSD accessibility; promoting competition to reduce the transaction costs caused by the current mobile payment duopoly; accelerating the country’s shift toward a cashless economy; and enabling faster, cheaper remittances. Local fintech leaders urge an emphasis on retail use to maximize adoption and iterate improvements quickly.
Meanwhile, Botswana is exploring the potential of a CBDC through a government-led feasibility study. The Bank of Botswana’s innovation hub aims first to assess whether a CBDC is necessary and if digital assets threaten the sovereign value of the Pula. Botswana boasts a small but sparsely populated population where mobile payments have grown significantly, increasing financial inclusion—though one-third of citizens remain unbanked.
Rwanda and Botswana represent contrasting stages in Africa’s evolving CBDC landscape: Rwanda actively shaping its digital currency through public participation and trials, and Botswana methodically weighing the benefits and risks before taking the plunge. These developments highlight a broader continental trend of cautious but persistent exploration amid shifting financial ecosystems.