Namibia is considering launching a central bank digital currency (CBDC) to improve cross-border payments and financial inclusion, with the IMF advising caution. Safaricom is facing a lawsuit for alleged unfair dealer contracts, which could impact telecom practices in Kenya. Additionally, Namibia’s telecom sector has experienced substantial growth in data revenue, reflecting a shift in focus from voice services. The government is also introducing policies to attract international investors by easing travel regulations.
Namibia is contemplating the introduction of its central bank digital currency (CBDC) to enhance cross-border payments and promote financial inclusion. The Bank of Namibia (BoN) is currently assessing the potential for a CBDC to address payment challenges, following recent guidance from the International Monetary Fund (IMF). Although the IMF supports BoN’s exploratory efforts, it cautions against hastily implementing a CBDC without first addressing the current payment infrastructure’s needs.
Despite the IMF’s reservations, the BoN continues discussions with neighboring central banks, including those in Eswatini, Lesotho, and South Africa, to evaluate how a CBDC could facilitate smoother cross-border transactions. The bank is actively considering the IMF’s suggestions as it formulates its strategy, aiming to make informed decisions moving forward. Namibia initially proposed the concept of a digital Namibian dollar in 2022 but has encountered challenges similar to those faced by other African nations implementing CBDCs.
For instance, Nigeria’s eNaira, launched in 2021, has not been as successful as anticipated. Meanwhile, Zimbabwe launched a gold-backed digital currency in an attempt to combat its currency’s devaluation in 2023. Ghana is still working on its eCedi, having engaged in successful pilot testing over the years without official rollout. Namibia’s approach reflects a prudent consideration of the lessons learned from these cases.
Additionally, Safaricom currently faces a lawsuit from Goodweek Inter-Services Limited, alleging unfair contract practices. The suit, which implicates Vodafone Plc and other parties, stems from Goodweek’s claims that Safaricom used its market dominance to impose unreasonable contract terms that ultimately led to the non-renewal of their dealership agreement.
The lawsuit originated after Goodweek’s access to Safaricom’s dealer portal was revoked following the expiration of their contract. Despite Safaricom’s assertion that Goodweek did not renew while over 400 other dealers did, Goodweek contends that the sales targets were unrealistic and intended to justify cuts in commissions and dealer benefits. This ongoing case could have significant implications for the structure of dealer agreements in Kenya’s telecom sector.
On a more positive note, Namibia’s telecommunications sector achieved notable success, generating over N$800 million (approximately $43 million) in data revenue during the third quarter of 2024. The shift from voice to data services has proven significant, as data revenue now constitutes 70% of total mobile service earnings, a rise from 46% in 2018. This trend mirrors broader patterns across Africa, with many telecom operators experiencing spikes in data revenues due to increasing demand for internet access and digital content.
To accommodate this growing demand, Namibian telecom companies are investing heavily in infrastructure upgrades, including 4G expansions and explorations into 5G technology. The government is also fostering an environment conducive to competition and innovation while striving to bridge the digital divide in rural areas. Despite the challenges, the expansion of data services offers substantial economic benefits, enhancing job prospects and expanding access to essential services.
Furthermore, Namibia plans to ease travel regulations by introducing visas on arrival starting April 1, aimed at attracting international visitors and investors, thus reducing bureaucratic hurdles and enhancing the country’s business climate.
In summary, Namibia is cautiously exploring the launch of a CBDC while addressing existing payment system challenges, taking note of the experiences of other African countries. Concurrently, Safaricom is facing legal challenges over alleged unfair dealership contracts, which might influence future practices in Kenya’s telecom industry. The data revenue growth in Namibia’s telecom sector underscores a significant shift towards digital services, promoting economic growth and access to essential services. Moreover, new policies, such as visa on arrival for travelers, may further enhance Namibia’s investment attractiveness.
Original Source: techpoint.africa
