In Africa, there is a race to define a digital currency standard for the emerging digital economy.
So far, we have three dogs in this fight, with no case of a pan-African central bank digital currency either live or at pilot stage.
- Bitcoin, a form of decentralized digital currency with no issuer
- Facebook’s libra, now diem, a privately issued digital currency
- China’s DCEP, a digital version of China’s legal tender, the yuan
Out of the three, China’s DCEP from the People’s Bank of China is the leading contender because of a sneaky 20 year head start. Since the mid 2000s, China has discreetly accumulated significant influence over Africa’s technology stack, close to 50% in the mobile handset and 70% in the mobile network layers.
Now, China can launch its digital currency on top of this stack, running on specially designed chips embedded deep within dozens of popular Chinese phone brands that dominate Africa.
China’s grand plan has three prongs: leverage its collective national and commercial influence, ride on Africa’s mobile payments success story and use its over 50% smartphone market share in Africa to distribute the DCEP. Huawei’s Mate 40, which launched in South Africa in October, is the first smartphone that enables a hardware wallet for the DCEP.