Nigerian Lenders Frustrate CBDC Adoption – Central Bank Governor – Emerging Markets Bitcoin News

Apathetic Nigerian lenders are frustrating the use of the e-naira because they are concerned that it could deprive them of an important source of income, Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), has said. Emefiele said the central bank is working on a channel that will enable Nigerians without bank accounts to open e-naira wallets.

E-Naira undercuts lenders’ investment in mobile banking infrastructure

Nigeria’s central bank governor, Godwin Emefiele, has reportedly criticized some lenders he accuses of obstructing the introduction of the e-naira digital currency in the country. According to Emefiele, lenders do not prioritize the promotion of the central bank’s digital currency because they fear that this could deprive them of income from regular banking services.

Explaining the reasons behind lenders’ reluctance, a Bloomberg report said e-naira transactions do not incur fees while the deposits are not considered cash in lenders’ books. Furthermore, the digital currency e-naira is said to undercut investments that lenders have made in mobile banking services as part of their efforts to boost fee and commission income.

Lender ‘Apathy’

After describing lenders’ reluctance to promote the use of the Central Bank’s digital currency (CBDC) as “apathy”, Emefiele disclosed that the Central Bank of Nigeria is about to end tests on a channel that will enable unbanked Nigerians to open e-naira wallets. The Central Bank cooperates with the mobile network operator MTN on this channel.

According to the CBN, since the launch of the digital currency in Q4 of 2021, only 700,000 e-naira wallets have been downloaded. Part of the reason for this is the fact that only account holders can open an e-naira wallet.

Meanwhile, after the central bank’s two-day monetary policy committee meeting, the CBN decided to increase the monetary policy rate (MPR) to 14%. Regarding the interest rate increase, Emefiele reportedly said:

If inflation continues to rise at this rate, we will continue to tighten [the] interest rate, but we are looking at other measures that will slow down inflation and food prices. But if that doesn’t happen, we [MPC] cannot promise that interest rate increases will stop.

However, the committee decided to “retain the asymmetric corridor of +100/-700 basis points around the MPR.” The liquidity ratio is also unchanged at 30%.

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Terence Zimwara

Terence Zimwara is a Zimbabwean award-winning journalist, writer and author. He has written extensively about the economic problems in some African countries, as well as how digital currencies can provide Africans with an escape route.