Nigeria launched its digital currency in 2021, and emerged as the first African country to take the initiative and one of the few countries in the world that have launched its Central Bank Digital Currency.
The Nigerian digital currency was designed to offer specific benefits across different sectors of the economy, but the eNaira has gained low public acceptance, as reported by the International Monetary Fund (IMF).
IMF reported only about 8% of eNaira wallets are in use after its initial uptake, with an average transaction value of ₦53,000. The Fund has only recorded 942,000 eNaira wallet downloads. It quotes, “The adoption of eNaira by households and merchants has been rather slow. After a strong initial uptake, wallet download have slowed, reaching 0.8% of bank accounts and merchant wallet downloads amount to about 10% of merchants with Point-Of-Sale terminals.”
According to International Monetary Fund, the solution is for CBN to initiate plans for those who do not have bank accounts but are able to use mobile phones to utilize the digital currency, as the digital currency would help promote financial inclusion if incentives are offered, and the use is encouraged in the economy as the cashless policy strives in the current season of naira note change.
While considering the probability of Nigerians without a bank account that have the means to use the digital currency, IMF had earlier reported in 2021, that 38 million Nigerians do not have bank accounts, which represents 36% of the adult population.
One of the ways traditional cryptocurrencies gain public acceptance is by providing rewards and encouraging the appreciable value of assets when the market price rises as they hoard digital assets. However, IMF stated that the eNaira is not a financial asset like conventional cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, Tronz and so on. “eNaira is a digital form of the national currency, and draws its value from the physical naira, to which it is pegged at parity”, it said.
IMF has also created positive awareness in its report that no cyber-attack has been perpetuated. The Nigeria digital currency delivers a much lower remittance for money transfers abroad. The use of the eNaira would also lower the remittance fee within the country.
A Washington-based lender advised that the central bank needs to attract and engage with mobile money operators through public and private partnerships to increase eNaira use in the country. Additionally, eNaira can be integrated into existing mobile payment systems when it serves as a safer store of value for mobile money users through an integrated mobile – CBDC wallet.
eNaira is just part of Nigeria’s FinTech instrument to improve financial inclusion. What might be the reason for its low usage even when it offers a lower remittance transaction fee?
Photo By eNaira.gov