The role of digital currencies in Ghana's economy

Right now the world is watching eagerly as the price of Bitcoin keeps rising and the promise of reaching the $100 000 mark is in reach. More and more conversations around digital currencies are taking place across Africa, and when it comes to Ghana the last few months have brought out much excitement for the economy.

Earlier this year, in May, the Ghanaian Vice President, Dr. Mahamudu Bawumia, boldly stated that the country aims to become the first African nation whose government runs entirely on blockchain. This would be a remarkable step as it would enhance transparency in public services, streamline governmental processes, and foster trust between citizens and authorities.

In August, the Bank of Ghana (BoG) released their Draft Guidelines on Digital Assets with the aim to regulate digital asset activities to enhance financial inclusion, economic stability, and most importantly making sure that VASPs follow strict measures for anti-money laundering (AML), cybersecurity and consumer safety while obtaining proper authorisation. This ultimately supports the growth and adoption of digital assets in the country.

Another strategic move came more recently as the BoG conducted a pilot program to test the eCedi with some key findings which included the need for stringent cybersecurity protocols and need for cost-effective transaction structures to ensure widespread adoption.

With this in mind there is no denying that one way or other digital currencies will become pivotal in the Ghanaian economy. But what role will it play?

One of the most compelling arguments for digital currencies in any economy is their ability to break down barriers to financial inclusion.

Early this year it was reported that there were a total of 38.95 million cellular mobile connections active in Ghana. With a large majority of the population already connected to the internet, it makes it easier for almost anyone to participate in the digital economy.

Another key benefit, especially when it comes to stablecoins, is the ability to hedge against inflation.

Over the past decade, the Ghanaian cedi has faced significant depreciation against major foreign currencies. Stablecoins like USDT (Tether) and USDC (USD Coin) are also becoming popular in Ghana. These digital currencies are pegged to the value of a fiat currency, such as the US dollar, offering the stability of traditional money with the advantages of blockchain technology. For Ghanaians, stablecoins provide a reliable way to save, transact, and transfer funds without worrying about the fluctuations of the cedi.

Companies like Yellow Card, Africa’s leading stablecoin-based infrastructure provider, are stepping up to fill this gap. Their efforts focus on integrating digital currencies into everyday lives enabling easier cross-border payments and enhancing the financial literacy of Ghanaians through dedicated educational programs.

While regulatory uncertainty is one of the biggest obstacles in many countries when it comes to digital currencies, Ghana is one economy that has taken proactive key steps. The Bank of Ghana has been proactive in exploring a Central Bank Digital Currency (CBDC) known as the eCedi.

This initiative could complement the adoption of cryptocurrencies by providing a regulated digital currency that works alongside traditional fiat and decentralised digital currencies. This is not just great for citizens, but these steps proactively open up even greater business opportunities in the country.

Ghana’s economy is at a tipping point. With the right mix of regulation, education, and technological innovation, digital currencies have the power to redefine how Ghanaians interact with money.

They can empower individuals, fuel entrepreneurship, and create new opportunities for growth in ways traditional financial systems never could.