Yesterday, Kenya published a discussion paper about a central bank digital currency (CBDC) potential, calling for a response by May 20. Some of Kenya’s motivations for a government-backed Kenyan Shilling have a lot in common with China’s digital yuan. Both China and Kenya have high rates of mobile payments. And both countries have cited interoperability of private payments as a key motivation. Additionally, Kenya is keen on reducing the cost of cross border remittances.
M-Pesa, the mobile payment service launched by Vodafone in 2007, is widely cited as a case study for advancing financial inclusion. The service originally targeted P2P payments with a network of agents who cash out the money locally. It has since evolved into a merchant payment service as well.
In 2006, the year before the M-Pesa launch, Kenya’s financial inclusion stood at 26%, compared to 83% currently. The number of adults with a mobile money account (79%) is almost double the number with a bank account (40%).
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