The Central African Republic is under scrutiny from financial analysts, entrepreneurs and the International Monetary Fund (IMF), drawing unfavorable comparisons to El Salvador’s bitcoin project.
Academics and businessmen questioned the Central African Republic government’s decision to work with the CFA to create bitcoin fiat currency in an April announcement.
“While bitcoin may facilitate some transactions, it’s an odd choice as a regular means of payment,” said Jacques Mandon of the London School of Economics.
Meanwhile, an entrepreneur in the country’s capital, Bangui, believes that other priorities are also necessary, such as security, energy, internet and roads.
“The adoption of Bitcoin as legal tender in the Central African Republic presents significant legal, transparency and economic policy challenges. IMF staff are assisting regional and Central African Republic authorities to address concerns arising from the new law,” IMF said Wednesday.
Government legalizes cryptocurrency
The country’s National Assembly voted unanimously to pass a bill legalizing cryptocurrencies, providing a regulatory framework and making bitcoin legal tender earlier this year, in the hope that cryptocurrencies and related digitization will boost the beleaguered $2.3 billion economy.
Opposition parties criticized the decision to make bitcoin legal tender, which was done without the knowledge of the central bank, which serves six countries, including the Central African Republic.
Due to a decade of armed conflict, the Central African Republic is one of the least developed economies in the world. The financial sector is grappling with economic stagnation amid weak market, legal and judicial frameworks. The country ranks second from last in the United Nations Development Programme’s Human Development Index.
What about the man on the street?
According to the World Bank, only 10% (557,000 of a population of 4.8 million) have access to the Internet, and some people have not even heard of cryptocurrencies.
“What is it?” asked Sylvain, a citizen in his 30s waiting in a queue at CAR’s ATM.
“I don’t know what cryptocurrency is, I don’t even have the internet,” said Joelle, an informal vegetable vendor in the same queue. However, the government spokesman did not seem to care.
Serge Ghislain Djorie said: “We will educate the population and soon move to fiber, the internet connection is weak enough to buy cryptocurrencies.”
No plans have been released for arranging the deployment of the proposed fibre connection.
Other African countries are more inclined towards central bank digital currencies. However, the Central Bank of Kenya said the full and limited adoption of smartphones is holding it back.
Last year, El Salvador became the first country to adopt Bitcoin as legal tender. Protests have taken place in Latin American countries after the introduction of bitcoin laws. The country has since faced criticism from the International Monetary Fund.
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