Contrary to assertions that Ghana’s yet to be launched digital currency, eCedi will bring competition to mobile money, a reliable source at the Bank of Ghana has stated that the eCedi will rather complement mobile money and other existing fintech platforms in the national digitization drive.
Since the Bank of Ghana (BoG) announced it was working on Ghana’s own version of a digital currency, some financial technology industry players have been pessimistic about its possible impact on mobile money, saying that the eCedi will “kill” mobile money.
Their argument is anchored on what the central bank said that, unlike cryptocurrency such as bitcoin, ethereum and others, which have no government backing, the eCedi will have the backing of the BoG and would actually have the same value as the physical cedi, except it will held in digital form.
Indeed, the First Deputy Governor of the BoG, Dr. Maxwell Opoku-Afari did tell journalists that the eCedi is actually legal tender, which can be used in the same way cash is used without losing its actual value.
Loss value on MoMo
Meanwhile, mobile money and other fintech platforms reduce the actual value of money, in that, transferring GHC100, for instance, actually means the sender would have to lose an extra GHC1, or can only send GHC99.
In the same way, when the receiver of that GHC99 wants to cash out the money or even transfer to another wallet, from his mobile money wallet, he would also lose another one per cent. So eventually, that GHC100 can completely lose its value if transferred several times on the mobile money platform.
This means, the value of money on the mobile money platforms reduces in transit. But the value of eCedi, per what the BoG said, will be the same as its cash value at all times.
Currently, the eCedi is being piloted among some 500 selected institutions and individuals in a sandbox by the BoG, after which it would be mainstreamed following the necessary fixes.
So the argument is that once the eCedi goes mainstream, many more people are likely to hold their digital money in eCedi instead of on mobile money wallets, where money loses its actual value.
One industry person said “If Ghana launches the eCedi, it will compete with mobile money – Whatever they call it, it is just a physical value sitting at a bank somewhere.”
He noted that when Nigeria launched the eNaira, they also introduced some speed wallets to enable the public hold and use their eNaira conveniently; and he suspects that is what will happen in Ghana eventually.
“Once that happens, mobile money will face stiff competition from eCedi for the simple fact that the value of one’s money remains intact in an eCedi wallet, but not in a mobile money wallet,” he argued.
But a very reliable source at the central bank has debunked that assertion, saying that BoG is not and does not intend to be a payment service provider and would therefore not create dedicated eCedi wallets.
“That capability will be given to the banks and fintechs instead – we’re not a payment service provider and don’t intend to be,” the source said.
The source also noted that Nigeria had to create the speed wallets for eNaira because they do not have mobile money services yet so there was an urgent need for digital wallets to fill that gap.
Moreover, the Nigerian central bank had faced a big challenge dealing with the rapid growth of cryptocurrency until it banned crypto entirely, so it had to come up with a quick and convenient alternative, and that was why they introduced the speed wallets.
“We have a different market because of the success of mobile money here. eCedi can be put into bank accounts and digital wallets to be sent as you can do with physical cash today,” the source said.
The source therefore insisted that eCedi will rather complement mobile money and other fintech platforms in driving the digital finance agenda, because once eCedi is launched, it will naturally reduce physical cash transactions and people will transact with their money in its digital form, using the mobile money and other fintech platforms.
According to the source, mobile money will treat eCedi just like it treats cash, so financial transactions will be less manual and everything will be entirely digital.
“In my view, eCedi will rather complement mobile money by supporting the digital drive,” another player in the industry stated to TechGh24.