Last month, Senegal announced its intention to introduce a national digital currency based on block chain technology, and become only the second country in the world following Tunisia to do so. Senegal’s new digital currency – called “eCFA” – will co-exist as legal tender alongside Senegal’s fiat currency, the CFA Franc. The CFA Franc, in turn, is the name of two effectively interchangeable currencies – the West African CFA Franc and the Central African CFA Franc – which are used by fourteen African nations. Not surprisingly, Senegal’s move toward a national digital currency likely will have broader regional implications for the future of national digital currencies in West Africa.
The eCFA is the product of a partnership between regional bank Banque Régionale de Marcheés (“BRM”), a Senegal-based bank, and eCurrency Mint Limited, a fintech company focused on enabling central banks to issue digital fiat currency. BRM will issue eCFA in compliance with e-money regulations adopted by the Central Bank of West African States (“BCEAO”), which is the primary bank of the West African Economic and Monetary Union (“WAEMU”), comprised of Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal, and Togo. BRM has announced that after eCFA is rolled out within Senegal, BRM plans to later distribute eCFA within these other WAEMU nations.
Critics maintain that the eCFA’s dependence on a centralized banking system defeats a primary purpose of digital currency (i.e., decentralization), and BRM has yet to reveal detailed technical information concerning eCFA. Setting those issues aside, however, eCFA could have a substantial impact in West Africa, where numerous individuals lack a bank account and could benefit tremendously to the extent eCFA provides them with a secure, reliable, and cost-efficient means of sending, receiving, and storing funds.