Namibia’s Digital Currency Aspirations Amid Telecom and Legal Developments
Namibia is assessing the launch of a CBDC to enhance financial inclusion while considering IMF recommendations to strengthen existing payment systems first. Safaricom faces a lawsuit over alleged unfair contracts with dealers, raising issues regarding market dominance. Meanwhile, Namibia’s telecom sector has seen substantial growth in data revenue, indicating a shift toward data services as the primary revenue source, prompting infrastructure investments.
Namibia is exploring the introduction of its central bank digital currency (CBDC) to enhance cross-border payment efficiency and promote financial inclusivity. The Bank of Namibia (BoN) is currently assessing whether a CBDC will address existing payment issues, following insights from a recent International Monetary Fund (IMF) technical mission. The IMF supports the research but cautions against hastening the full implementation of a CBDC, recommending an enhancement of Namibia’s current payment infrastructures first.
Despite these recommendations, BoN is engaging with central banks from Eswatini, Lesotho, and South Africa to analyze potential benefits of a CBDC for cross-border transactions. The Bank intends to utilize IMF feedback to carefully tailor its strategy before making any definitive choices. Namibia initially proposed a digital Namibian dollar in 2022, but it has since limited its activities to discussions with other central banks concerning possible applications.
This deliberation reflects a prudent approach, particularly in light of challenges faced by fellow African nations in implementing CBDCs. Nigeria’s eNaira, launched in 2021, has not yielded anticipated outcomes, while Zimbabwe’s recent gold-backed digital currency aimed to counter local currency depreciation. Ghana has also been slow to implement its eCedi despite successful pilot programs. The question remains whether Namibia will fully commit to a CBDC or heed the IMF’s counsel to fortify existing systems first.
In another significant development, Safaricom is facing legal action from Goodweek Inter-Services Limited, a long-standing dealer, alleging unfair contract terms that led to the termination of their dealership agreement. This lawsuit, now before Kenya’s High Court, also implicates Vodafone Plc and Mobitelea Ventures Limited. Goodweek contends that Safaricom leveraged its market position to impose unreasonable expectations and one-sided agreements that allowed rapid contract terminations, adversely affecting dealers’ earnings.
Safaricom asserts it merely followed standard procedures regarding the expiration of Goodweek’s access to its dealer portal, as over 400 other dealers successfully renewed their contracts. Goodweek, however, claims that sales targets imposed were intentionally unrealistic, creating a scenario to justify reducing commissions. The outcome of this case may redefine contractual relationships between major telecommunications firms and their dealers in Kenya.
Additionally, Namibia’s telecommunications sector reported over N$800 million ($43 million) in data revenue for the third quarter of 2024. This represents a significant shift, with data services now comprising 70% of total mobile service revenues, up from just 46% in 2018. The upward trend parallels similar developments across the African continent, driven by increased smartphone use and affordable data plans.
To accommodate this growing demand, Namibian telecom companies are investing heavily in infrastructure. Telecom Namibia is enhancing its national 4G capabilities and considering a 5G rollout in urban areas. Moreover, the government is fostering policies to promote competition and innovation to improve internet access, particularly in remote regions, where substantial connectivity gaps still exist. Initiatives to address cybersecurity concerns are also underway.
The increase in data usage is poised to deliver wide-ranging economic benefits, enhancing job opportunities and promoting the growth of eCommerce and access to essential services. Furthermore, Namibia will implement visas on arrival starting April 1 to facilitate travel for international investors and tourists, further positioning the country as a business-friendly destination.
In other updates, MTN reported revenue of $1.1 billion in Ghana, with substantial growth stemming from data and mobile money services. Noteworthy upcoming opportunities include various job openings from MTN, Kuda, Paystack, and others within the African tech landscape, underscoring a dynamic job market.
Namibia is cautiously progressing towards the potential launch of a CBDC, focusing on improving existing payment structures as advised by the IMF. Meanwhile, Safaricom is entangled in a legal battle with Goodweek, highlighting concerns over contractual fairness in Kenya’s telecom sector. Moreover, Namibia’s telecom industry is experiencing a significant revenue surge, largely driven by data services, prompting increased investments in infrastructure to meet growing consumer demands. Overall, these developments signify important shifts and challenges in Namibia and Kenya’s digital and telecommunications landscapes.
Original Source: techpoint.africa
