Nigeria is struggling to push CBDC to its citizens

Nigerian digital currency, eNaira, seems not as popular as it was touted to be. As Bloomberg reported, less than 0.5% of Nigerians have used the eNaira, the central bank digital currency (CBDC) launched last year by the Central Bank of Nigeria (CBN).

According to a Bloomberg report, the population faced a lack of clarity from the authority. Essentially, Nigerians prefer crypto to a state-regulated CBDC. CBN cracked down on crypto trade in 2021. Crypto is seen as a viable alternative to central bank issued currency.

Lately, the Nigerian economy is struggling with inflation and a weakening currency. The national currency Naira has been devalued multiple (almost 6) times since 2015. The inflation rate reached a 17-year high at 20.77% in September. Prices of essential items like bread and gas are rising rapidly.

“The eNaira does not address any of these basic use cases, so no surprise at its low adoption rates so far,” said Adesoji Solanke of local investment bank Renaissance Capital.

While the Nigerian authorities may be struggling with their CBDC, the population, in general, is seemingly interested in crypto. According to Chainalysis, Nigeria ranks first in crypto adoption among African countries and 11th in the world. While 35% of Nigerians in the age group of 18 to 60 used crypto this year, crypto exchange Kucoin revealed.

Similar to most other countries that are adopting or testing CBDCs Nigeria too wanted to be an early entrant into the digital economy. 

This August, the CBN governor Godwin Emefiele at the 2022 eNaira Hackathon held in Abuja: “We don’t have a choice but to live with the fact that we are now in a digital economy, in a digital space, where the user[s] of cash will dissipate almost to zero.”

During the eNaira Hackathon, Emefiele said that the second phase had a target of 8 million active users and aimed to serve those who did not have bank accounts. He added that by August, eNaira had been used in 200,000 transactions.

Last October, Nigeria launched the digital currency eNaira – months after it barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies.

Nigeria joined dozens of other countries now in the pilot stages with their own central bank digital currencies (CBDCs), including China, South Korea, and Sweden, with a total of 112 countries in other stages of exploring CBDCs.