One year later, has E-Naira defeated the private crypto adoption?
It’s been a year since Nigeria launched Africa’s first Central Bank Digital Currency (CBDC). But reports find the response to be anything but overwhelming.
Bloomberg noted in its recent report that the use 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 official launch shortly after 25 October 2021.
Lack of use cases for e-naira
The launch occurred against the backdrop of the growing use of private cryptocurrencies in the region. According to local reports, President Muhammadu Buhari last year at the time of its introduction expected the e-Naira to increase remittances, promote cross-border trade, improve financial inclusion and make it easier for the government to pay for welfare.
However, according to Bloomberg research, Nigerians are unable to differentiate 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: “eNaira does not address any of these basic use cases, so there is no surprise at the low adoption rate so far.”
Babatunde Obrimah, CEO of the Fintech Association of Nigeria opines: “They [Younger Generation] sees the regulator as hostile to them and therefore has no interest in anything it introduces,”
Other challenges to CBDC adoption
BeInCrypto noted earlier this year that inflation is another reason why younger generations have ditched Naira for crypto. In September, inflation reached a 17-year high of 20.8%, up from 20.5% recorded in August.
Another reason e-Naira has apparently slowed adoption is regulatory barriers to cross-regional transactions. Chainalysis found in its 2021 research that Africa is a significant market for P2P platforms due to regulatory roadblocks against crypto businesses. Along with restrictions on transfers abroad in some regions. Nigeria, for example, has made it challenging for clients to move money from their bank accounts to crypto businesses. This has limited transfers from the country, according to the research firm.
Despite the challenges, the top bank in the country is optimistic. Celebrating the launch of the e-Naira last week, Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), said: “We have put in place all the necessary infrastructure to enable us to undertake a cashless nationwide journey.”
Emfiele added, as quoted by African Business, that with other central banks preparing to introduce CBDC, Nigeria can educate the rest of the world from the experience it gathers in this area.
According to the Atlantic Council, over 95% of the world’s GDP, or 105 countries, are considering a CBDC. Meanwhile, a digital currency has been fully introduced in at least ten nations, according to the report.
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