Allexer Namundjembo
The Bank of Namibia (BoN) is exploring the potential of central bank digital currencies (CBDCs) to improve financial inclusion and streamline cross-border payments.
Kazembire Zemburuka, director of strategic communications and international relations, said the central bank is in the ‘preparation phase’ of evaluating a domestic CBDC.
According to him, the BoN is examining the desirability of CBDCs for the retail and wholesale sectors, as well as their potential for cross-border payments.
“The bank’s exploration is guided by the IMF’s 5P Methodology and involves extensive research and staff training,” Zemburuka said.
He added that a recent feasibility study, conducted with IMF technical assistance, is a key part of this research.
The study explored the implications of CBDCs on financial inclusion and monetary policy, suggesting a potential roadmap for implementation.
BoN is also collaborating with the Bank of Eswatini, the Bank of Lesotho, and the South African Reserve Bank on cross-border CBDC usage within the Common Monetary Area (CMA) to boost regional payments.
However, challenges remain.
“CBDC alone can’t solve issues like digital infrastructure and financial literacy,” said Kazambire.
He said BoN is prioritising an instant payment project as an immediate step toward financial inclusion.
“Despite challenges, like integrating CBDC with NamPay and IPS, BoN views CBDC as a valuable digital payment option,” he added. “The bank is committed to addressing macro-financial risks related to liquidity, market rates, and foreign exchange reserves.”
Zemburuka confirmed that the BoN is carefully considering the IMF’s feasibility study recommendations to refine its roadmap for implementing a Namibian CBDC.
According to the IMF report, this mission marked the third engagement with the BoN on retail CBDC (rCBDC). The first was a virtual CBDC workshop in February 2023, followed by a four-day virtual training in October 2023 to strengthen BoN staff’s rCBDC capabilities.
The IMF recommended that Namibia establish a clear rationale for rCBDC before a more resource-intensive exploration.
The bank was also urged to assess both the benefits and risks of rCBDC and non-CBDC solutions.
“The BoN should establish internal policy dialogues to make well-informed decisions and continue engaging stakeholders,” the report stated.
The IMF also advised BoN to assess how existing payment solutions and rCBDC could address financial inclusion challenges, exploring rCBDC designs that support inclusion, such as offline payments, interoperability, and zero transaction costs.
Economist Salomon Hei believes the introduction of digital currency in Namibia is not a quick fix.
“There needs to be a regulatory framework to safeguard consumers. The BoN is still working on CBDC, and after that, it can be implemented,” he said.
