Kenya CBDC Tracker

Kenya is currently in the research phase of its central bank digital currency (CBDC) development. At the moment, the Central Bank of Kenya has said it will “continue to monitor developments in CBDCs to inform future assessments.”

Current human rights and civil liberties concerns in Kenya include widespread corruption and the oppression of dissenting voices. A CBDC could worsen these issues.

CBDC History and Development

The Central Bank of Kenya published a CBDC discussion paper in February 2022. The central bank said that it “has been at the forefront of monitoring [CBDC] developments.” The central bank further wrote, “As is with mobile money, the focus of CBDC innovation must be on functionality and the problem it resolves for the people rather than the underlying technology. Whilst CBDC offers opportunities to reduce costs associated with digital payments, it also comes with risks, particularly related to cybersecurity and unknowns on how it would impact central banks’ core functions of monetary policy, financial stability, and payment systems oversight.” In the end, the central bank closed the discussion paper with 12 questions for the public.

In March 2022, Central Bank of Kenya governor Patrick Njoroge spoke about CBDCs at the 2022 BIS Innovation Summit. Njoroge expressed skepticism about the potential for CBDCs. He noted that problems like cultural norms and ID access “cannot be solved with CBDCs.” Njoroge said, “The point here is let’s not look at CBDCs as the silver bullet for all the problems that we have. On the contrary, deal with the problems directly.”

Central Bank of Kenya governor Patrick Njoroge spoke about CBDCs again at an event hosted by the International Monetary Fund in June 2022. Njoroge noted that financial inclusion tripled from 26.7 percent in 2006 to 83.7 percent in 2021. He largely credited the private sector (e.g., M-Pesa) for these developments. With this fact in mind, Njoroge said, “I want to insist that we approach things by looking at what problem [we are] solving.” Njoroge further said, “One needs to understand… there’s no one-size-fits-all with regard to using the CBDCs or, for that matter, the problem that should be addressed.”

In its 2022 annual report, the Central Bank of Kenya included takeaways from the responses to the discussion paper. The central bank received a total of 116 responses from across 9 countries. Responses were generally in favor of a CBDC. According to the central bank, people thought a CBDC could help financial inclusion, cross-border transactions, and payment inefficiencies. However, the central bank also acknowledged that most respondents “considered CBDC to be the same as crypto assets, [so] there should also be public awareness and education on the phenomenon of CBDC, particularly its differences from cryptocurrencies.” The Central Bank of Kenya published the results from its 2022 discussion paper in May 2023.

In June 2023, the Central Bank of Kenya published a press release that said, “[The] implementation of a CBDC in Kenya may not be a compelling priority in the short to medium term[, but the Central Bank of Kenya] will continue to monitor developments in CBDCs to inform future assessments of the need for CBDC in Kenya.” The central bank further said, “Nevertheless, on the global stage, the allure of CBDCs is fading.” Based on this fading allure and recent public comments, the central bank decided to take a cautious approach.

Human Rights and Civil Liberties Concerns

Kenya earned a 52 out of 100 in Freedom House’s 2023 Freedom in the World report. Although there are many concerns in Kenya, the concerns most relevant to the issuance and use of a CBDC are widespread corruption and the oppression of dissenting voices. A CBDC could worsen these issues.

“Corruption continues to plague national and county governments in Kenya, and state institutions tasked with combating corruption have been ineffective,” according to Freedom House. Like many other countries suffering from corruption, part of the problem appears due to weak and even absent anticorruption efforts. The existence of pervasive corruption is a major concern with CBDCs because it calls into question any promises that might be made by the government to limit surveillance, control, or other risks of CBDCs. Furthermore, the existence of corruption calls into question whether CBDC policies might be designed to exert political favoritism through subsidies, price controls, or other targeted restrictions.

Freedom House also reported that “Kenya has an active civil society, but nongovernmental organizations (NGOs) have faced growing obstacles in recent years, including repeated government attempts to deregister hundreds of NGOs for alleged financial violations.” Unfortunately, a CBDC could be used as another tool in this effort. Across the world, governments have often turned to freezing and seizing the money of activists, political rivals, and protestors to undermine the opposition. A CBDC would make such initiatives easier by allowing governments to take direct control of each citizen’s finances.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.