The Central Bank of the Kingdom of Eswatini has made a major move toward digitizing its economy by publishing a design paper for its planned central bank digital currency (CBDC), the digital lilangeni. This comes as part of the country’s broader efforts to modernize its financial system and embrace digital payments.
Eswatini, a landlocked country with a population of 1.2 million located between South Africa and Mozambique, plans to launch a tokenized retail CBDC that will function on a distributed database, rather than relying on a centralized system. The more commonly known is distributed ledger technology. According to John Kiff, a prominent CBDC consultant and blogger, the digital lilangeni could transform Eswatini’s financial landscape.
A CBDC Tailored for Eswatini’s Needs
The design paper outlines several features specific to Eswatini’s unique requirements. Notably, the digital lilangeni would offer both online wallets, managed by financial institutions, and hard wallets, likely in the form of smart cards, that can function without internet access. This dual system ensures financial inclusion, particularly in areas with limited or unreliable connectivity.
The Central Bank also envisions an intermediated model for the digital currency, where financial institutions act as the distributors of the digital lilangeni, while the central bank maintains control over the infrastructure. The CBDC would include pseudo-anonymity, preserving users’ privacy while ensuring compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.
In addition to traditional payments, the digital lilangeni will be programmable at the wallet level, allowing for automated transactions or restrictions on spending, such as limiting children’s purchases. This feature has been seen as especially valuable in less developed economies, where it can facilitate better financial management.
Eswatini’s journey toward a cash-lite society has been gradual. Despite the growth of digital financial services, like mobile money and bank cards, cash remains the dominant payment method. In 2022, the Central Bank made strides by phasing out checks, signaling a commitment to a more digitally focused economy.
Interoperability and Technological Challenges
A critical issue for the success of the digital lilangeni will be interoperability. The CBDC needs to integrate seamlessly with Eswatini’s existing electronic money framework and align with international standards. The lilangeni is currently pegged to the South African rand, which introduces an additional layer of complexity to the development of the digital currency.
The Central Bank worked alongside Giesecke+Devrient—a company specializing in CBDC technology—using its Filia technology to design the digital currency. The CBDC has already undergone proof-of-concept, as well as sandboxed and live pilot projects. However, staff training emerged as a challenge during the pilot phases and will require greater attention before a full-scale implementation can occur.
Eswatini and Global CBDC Trends
Eswatini’s approach to its digital currency resembles Rwanda’s plans for its own digital franc. Both countries have opted for token-based CBDCs running on distributed databases, which are expected to be more reliable than blockchain systems, particularly in less developed nations.
While programmable CBDCs have faced skepticism in Global North countries due to concerns over privacy and control, they are seen as potential tools for combating corruption and improving financial oversight in other regions. For example, in Kazakhstan, a programmable CBDC is being explored as part of anti-corruption measures.
Eswatini’s adoption of these technologies marks a forward-looking approach that could serve as a model for other countries in Africa and beyond. As the Central Bank continues its journey toward launching the digital lilangeni, the world will be watching to see how Eswatini navigates the complex challenges of CBDC implementation.
I am Toby Rothschild, Co-Founder of Spearmint and author at Coinography, and a strategist focused on advancing Web3 innovation, digital ecosystems, and the future of decentralized technology. I combine product thinking, creative leadership, and deep interest in emerging trends to help shape how individuals and organizations interact with the next generation of digital systems.
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