Experience also being drawn from other developing countries

Uganda plans to implement a Central Bank Digital Currency (CBDC) and is currently drawing lessons from Jamaica, which is now rolling out its Jam-Dex CBDC.

Uganda recently announced plans to introduce a CDBC, a move that has drawn policy attention to the large investments required for a successful trading ecosystem and crucial mileage offered by digital payments systems such as mobile money services and internet banking.

The implementation timelines are yet to be confirmed while the actual cost of issuing a government-owned digital currency remains unclear.

Also unclear are the costs surrounding this venture such as the development of software tools, improved electricity generation for running high energy consuming block chain technology platforms, and recruitment of specialist personnel.

George Wilson Sonko, a performance measurement analyst at the Bank of Uganda, explains that the bank is, “studying the idea of a Central Bank Digital Currency with the aid of case studies developed by peer central banks in Jamaica, Nigeria, Ghana and Kenya among others”.

The law does not accommodate digital currency use in Uganda but we are exploring legal options for future amendments in financial laws that will facilitate circulation of digital currency denominations.

He stated that the dominant youth segment of the population  is a plus for introduction of a digital currency because it fits into their tech savvy behavioural patterns explaining that digital currencies rely a lot on blockchain technology, which creates a big investment burden on its ecosystem in form of human resources like data scientists.

Digital currency rolls out in Uganda

The rollout of a digital currency in Uganda will be anchored on execution of high value financial transactions that may be processed at a cheaper cost on a blockchain platform compared with the Real Time Gross Settlement System and mobile money platforms.

Fred Muhumuza, a local economist, identified that “the previous rollout of mobile money services that depend on digital wallets has levelled the ground for a future digital currency and that means less resistance from the local population. The biggest risk posed by digital currencies in developing economies lies in high frequency transactions by market players with little scrutiny, and are not backed by physical cash”.