It has been one year since Nigeria launched Africa’s first central bank digital currency (CBDC). But reports find that the response is all but overwhelming.
Bloomberg noted in its recent report that the adoption of digital currency in Nigeria is less than 0.5%. Despite the government’s push. The Central Bank of Nigeria launched the e-Naira website in September last year. With its official launch soon after on 25 Oct. 2021.
Lack of use cases for e-naira
The launch occurred on the back of the increasing adoption of private cryptocurrencies in the region. As per local reports, President Muhammadu Buhari anticipated last year at the time of its introduction that the e-Naira would boost remittances, promote cross-border trade, enhance financial inclusion, and make it easier for the government to pay for welfare.
However, according to Bloomberg’s research, Nigerians are unable to distinguish between the sovereign digital money e-Naira and Bitcoin or any other cryptocurrency. This is after the government tried to push adoption among motorized rickshaw operators by offering a 5% discount.
Adesoji Solanke, director at Renaissance Capital in Lagos, told the media outlet, “The eNaira does not address any of these basic use cases, so no surprise at its low adoption rates so far,”
Babatunde Obrimah, chief operating officer of the Fintech Association of Nigeria, believes, “They [Younger Generation] see the regulator as hostile to them and therefore have no interest in anything it introduces,”
Other challenges to CBDC adoption
BeInCrypto noted earlier this year that inflation is another reason younger generations have ditched Naira for crypto. In September, inflation hit a 17-year high of 20.8%, from the 20.5% recorded in August.
Another reason that the e-Naira has seemingly reduced adoption is legislative barriers to cross-region transactions. Chainalysis found in its 2021 research that Africa is a significant market for P2P platforms due to regulatory roadblocks introduced against crypto businesses. Along with restrictions on transfers abroad in some regions. Nigeria, for instance, has made it challenging for clients to move money from their bank accounts to crypto businesses. This has capped remittances from the country, per the analytics firm.
Despite the challenges, the apex bank in the country is optimistic. Celebrating the e-Naira launch last week, Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), stated, “We have provided all the necessary infrastructure that should enable us to make a cashless nationwide journey,”
Emfiele added, as cited by African Business, that with other central banks preparing to introduce CBDCs, Nigeria might educate the rest of the world from the experience it is accumulating in this area.
According to the Atlantic Council, over 95% of the world’s GDP, or 105 countries, is considering a CBDC. Meanwhile, a digital currency has been fully introduced in at least ten nations, per the report.
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