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DIGITAL CURRENCY

Kenya ranked 4th globally in digital currency ownership

Digital currency works in the same way as physical hard currency.

In Summary

• The 2021 index by United Nations Conference on Trade and Development (UNCTAD) ranks Kenya in the fourth position with 8.5 percent of its population being digital currency owners.

• According to the data, Ukraine tops the list with 12.7 per cent followed by Russia (11.9%) and Venezuela with 10.3 per cent.

Virtual currencies such as Bitcoins are not legal tender in Kenya
Virtual currencies such as Bitcoins are not legal tender in Kenya
Image: COURTESY

Kenya has been ranked among top 15 emerging global economies with the highest percentage of populations who own digital currency.

Digital currency is a virtual version of the shilling that can exchange on a one-to-one basis with physical cash and is meant to ease payments and cut transaction costs.

The 2021 index by United Nations Conference on Trade and Development (UNCTAD) ranks Kenya in fourth position with 8.5 percent of its population being digital currency owners.

According to the data, Ukraine tops the list with 12.7 per cent followed by Russia (11.9%) and Venezuela with 10.3 per cent.

India (7.3%), South Africa (7.1), Nigeria (6.3%), Colombia (6.1), Vietnam (6.1) and Thailand (5.2%) close the top ten slots while Brazil (4.9%), Pakistan (4.1%), Philippines (4%) and Peru and Belarus with 3.7 per cent each take the last five slots among the 15 emerging economies. 

In the advanced economies category, Singapore takes the lion share with 9.4 per cent of its population owning digital currency followed by USA with 8.3 per cent.

The UK comes third with 5 per cent, Republic of Korea with 3 per cent and Australia with 3.4 per cent. 

Global ranking of digital currency ownership in emerging and advanced economies.
Global ranking of digital currency ownership in emerging and advanced economies.
Image: SOURCE: UNCTAD

A 2020 study by The Fletcher School at Tufts University in partnership with Mastercard recommended to the Kenyan government to do more to nurture the digital economy and instill trust in their emerging digital ecosystems.

The study dubbed Digital Intelligence Index monitors the progress countries have made in advancing their digital economies.

The index cited the Middle East and Africa as emerging hotspots for digital demand, with nations like Kenya leading the way.

However, in March this year, the Central Bank of Kenya (CBK) warned that low 4G smartphone penetration would hinder the rollout of its proposed digital currency which requires access to the Internet.

CBK Governor Patrick Njoroge said in an interview that the rollout of the Central Bank Digital Currency (CBDC) would lock out half of the population from transacting in the CBDC because more than half (56%) of the 59 million cellphones devices in Kenya are not 4G enabled.

"Such a development could lead to greater financial exclusion such that some people may fall out of the financial system just because we have adopted a CBDC," Njoroge said.

Digital currency works in the same way as physical hard currency, exchanging freely within wallets and in person-to-person payments.

The CBK in February invited public views on the potential introduction of the digital currency.

CBK views CBDC as a safer alternative to the existing, unregulated digital currencies such as Bitcoin.

Nigeria is the only African country that uses digital currency following the launch of its eNaira in October 2021.


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