On October 25, Nigeria commemorated the first anniversary of the Central Bank of Nigeria’s e-naira, even as more residents continue to snub the digital currency. In a move aimed at boosting the use of the CBDC, the central bank is offering a 5% discount to motorized rickshaw drivers and passengers that use the e-naira. Kingsley Obiora, a deputy governor at the CBN, suggested that the digital currency needs “a little push from the government” if it is to be widely embraced.
E-Naira Rollout at Phase 2
As Nigeria commemorated the e-naira’s first anniversary on October 25, critics have claimed that the average Nigerian has still not embraced Africa’s first central bank digital currency (CBDC). They point to the e-naira wallet’s relatively low number of downloads as well as the still-growing use of cryptocurrencies when remitting funds or making cross-border payments.
In August, Bitcoin.com News reported that between January and June this year, peer-to-peer bitcoin traded volumes on Paxful alone amounted to nearly $400 million. The figure is more than half the $760 million that was recorded in the whole of 2021. According to Paxful, Nigerians were resorting to cryptocurrencies and peer-to-peer trading platforms because they provide “an opportunity for financial inclusion.”
Yet, despite the apparent snub of the CBDC by Nigerians so far, the Central Bank of Nigeria (CBN) is still projecting an eightfold increase in the number of e-naira wallet downloads. As previously reported by Bitcoin.com News, the central bank hopes to achieve this via the use of various initiatives that include enabling the unstructured supplementary service data (USSD) functionality to the wallet app.
The CBN has also engaged payment service providers like fintech giant Flutterwave, which has since added the e-naira to its list of payment options for merchants. In one of its latest moves aimed at boosting the use of the CBDC, the central bank is offering a 5% discount to drivers and passengers of motorized rickshaws that pay with the e-naira.
According to a statement released by Bitt — the CBN’s technology partner — the onboarding of banked customers and merchants is consistent with phase two activities of the central bank’s staggered rollout of the CBDC. In the third stage, the CBN said it will seek to onboard the “Nigerian Trade and Exchange platform.” This phase will also include “sector-specific tokens for grants and subsidies” as well as “programmable payments for e-naira payment scenarios.”
CBN Optimism Not Shared by Everyone
Remarking on the occasion to mark the CBDC’s anniversary, Brian Popelka, the CEO of Bitt said:
This year has been full of firsts for Africa. Being the first provides the opportunity to become the first to find solutions and chart the course for others to follow. Today’s one-year milestone is an exceptional achievement for both the Central Bank of Nigeria and Bitt teams. We look forward to continued partnership on this CBDC deployment journey and to provide additional features to expand eNaira’s value to all Nigerians and everyone, everywhere.
However, Popelka and the CBN’s optimism is not shared by everyone. Adesoji Solanke, a director with the investment bank Renaissance Capital, is one critic. With Nigeria facing ongoing foreign exchange shortages, Solanke, just like his fellow Nigerians, hoped the e-naira would turn out to be a stable alternative to the depreciating naira.
In remarks published by Bloomberg, Solanke insisted the CBN’s digital currency “does not address any of these basic use cases, so no surprise at its low adoption rates so far.”
Meanwhile, Kingsley Obiora, a deputy governor at the CBN, is quoted in the report suggesting that “a little push from the government” is needed if the CBDC is to take off. Josh Lipsky, director of the Atlantic Council’s Geoeconomics Center, reportedly said both the central bank and government must be involved in efforts aimed at helping more Nigerians become acquainted with the CBDC.
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October 27, 2022
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