Uganda launches CBDC pilot as Kenya’s crypto bill passes final hurdle
News Summary
Uganda has launched a central bank digital currency (CBDC) pilot as part of a broader real-world asset tokenization effort. Blockchain financial infrastructure company Global Settlement Network (GSN) has partnered with Ugandan developer Diacente Group to tokenize $5.5 billion in real-world assets, including infrastructure, mining, and solar projects. Uganda's CBDC is deployed on GSN's permissioned blockchain, backed by treasury bonds, accessible via smartphone, and adheres to KYC and AML standards. Concurrently, Kenya's Virtual Asset Service Provider (VASP) bill has passed parliament and awaits the president's signature to become law. The bill establishes licensing, consumer protections, and a regulatory framework for exchanges, brokers, wallet operators, and token issuers. The Central Bank of Kenya will oversee payment and custody functions, while the Capital Markets Authority will regulate investment and trading activities. Sub-Saharan Africa is identified as one of the fastest-growing regions for crypto adoption, with stablecoins accounting for approximately 43% of the region's total transaction volume.
Background
Sub-Saharan Africa (including Uganda and Kenya) was flagged as the third-fastest growing region for crypto adoption globally, having received $205 billion in on-chain value between July 2024 and June 2025. Nigeria was the first African country to launch a CBDC in 2021, with others like Ghana and South Africa having also piloted CBDCs. Egypt has a launch date of 2030, while Rwanda and Kenya are still in the research and public consultation phase. Statista estimates that over 75 million users will be in the crypto space in Africa by 2026, with a user rate of 5.90%, and total revenue from the continent projected to hit $5.1 billion by 2026. Stablecoins account for approximately 43% of the Sub-Saharan African region's total transaction volume, with Nigeria, South Africa, Ghana, Kenya, and Zambia making up the top five; Uganda ranked seventh.
In-Depth AI Insights
What are the deeper geopolitical and economic motivations driving these African nations towards formalizing digital assets, beyond stated goals of financial inclusion and transparency? - Challenging the existing global financial order: By developing independent digital financial infrastructure, they aim to reduce reliance on Western-dominated financial systems and payment networks like SWIFT, enhancing financial sovereignty. - Attracting non-traditional capital: Tokenization of real-world assets and clear regulatory frameworks could attract investment from Asia, the Middle East, or other emerging economies, which may be more willing to bypass traditional Western banking complexities and conditionalities. - Enhancing control over capital flows: CBDCs allow central banks more direct monitoring and management of domestic money supply and cross-border transactions, especially amidst increasing global economic uncertainties. How might the differing approaches taken by Uganda (CBDC + RWA tokenization) and Kenya (VASP regulation) influence regional economic competition and foreign investment flows in the long term? - Uganda's model may attract capital focused on infrastructure development and real asset investment, particularly in energy, agriculture, and mining, by lowering entry barriers and increasing liquidity through tokenization. - Kenya's regulatory clarity could attract more venture capital focusing on digital asset services, exchanges, and blockchain technology companies, positioning it as a regional hub for crypto innovation, potentially becoming Africa's "crypto Switzerland." - This divergence could lead to a complementary or competitive relationship between the two nations in attracting different types of foreign direct investment, with Uganda potentially drawing "hard asset" investments and Kenya attracting "digital economy" investments. Considering the Trump administration's stance on emerging markets and digital currencies, what does this imply for US-Africa relations and the future development of Africa's digital economy? - The Trump administration's stance on digital currencies might favor the global dominance of the U.S. dollar, potentially leading to caution or discouragement regarding African nations developing independent digital currency systems. - However, if the development of Africa's digital economy can facilitate investment by U.S. companies and technology exports, or help counter China's growing influence in Africa, the Trump administration might adopt a pragmatic, cooperative approach. - African nations' autonomous exploration in the digital currency space may enhance their bargaining power in the global economy in the long term, but they might also face short-term pressure from traditional financial powers.