Ethiopia is making significant strides in its economic reform by preparing for the introduction of a central bank digital currency (CBDC). The National Bank of Ethiopia (NBE) has drafted two proclamations aimed at establishing a legal framework for a CBDC, alongside other economic reforms.

One of the key elements of the NBE Proclamation is the creation of a legal framework for introducing a CBDC "as necessary." Additionally, the policy changes include increasing the NBE's capital and establishing a legal basis for consumer protection. The Banking Business Proclamation complements this by addressing the liberalization of foreign investment in banking, implementing corrective measures for struggling banks, and creating a regulatory sandbox for innovative financial solutions.

These proclamations have received approval from the Council of Ministers and are set to be introduced to the House of Representatives. This initiative is part of the government’s broader Homegrown Economic Reform Agenda. Earlier reports indicated the government’s interest in a CBDC, with a study on the matter expected to commence in June. The NBE also plans to join an unspecified Cross Border Payment System by December.

Ethiopia has already begun its journey toward economic liberalization, notably ending the state monopoly on mobile money services. The country utilizes blockchain-based digital infrastructure for significant government payments. Despite digital currencies being illegal in Ethiopia, the country has licensed numerous data mining firms to leverage its cheap electricity for crypto mining. Plans are also underway to introduce the Web3 Fuse payment system.

Crypto adoption is gaining momentum in several African countries despite challenges such as low internet penetration. Not all attempts have been successful; for instance, the Central African Republic's adoption of Bitcoin and the launch of the Sango cryptocurrency have seen limited success, with the Sango currency website currently non-functional.

At least 18 African countries are researching CBDCs. Nigeria has had mixed experiences with its eNaira, launched in 2022 as the world’s second live CBDC. Zimbabwe has introduced a government-issued gold-based token as part of its latest currency initiative. Ethiopia's move toward a CBDC marks a significant step in aligning with this regional trend of exploring digital currencies.