How Has the e-Naira Fared 1 Year After Launch?
- Nigeria is one of the 11 countries to have fully developed a CBDC.
- The Central Bank of Nigeria has attempted various means to boost the adoption of the e-Naira, including offering a 5% discount to commercial drivers.
One year has passed since the Central Bank of Nigeria introduced the e-Naira, which officials thought would help the country’s economy and battle inflation. However, detractors claim that the e-Naira has fallen below expectations a year later.
On Tuesday, senior government officials, business executives, and central bank officials celebrated the first anniversary of the e-Naira in the country’s commercial hub, Lagos. Officials, during the occasion, claimed that more than 700,000 transactions totaling $18.3 million had been made using the digital currency. In addition, senior bank officials who graced the event on Tuesday claimed that e-naira, Nigeria’s CBDC, could play a huge role in changing the country’s fortunes and advancing the financial sector.
According to Godwin Emefiele, Nigeria’s CBN governor,
As we speak today, some of the fears that we had at the time of introducing our digital currency, which were predominantly centered around the risk of fraud and all that… we have not witnessed. The e-Naira is expected to enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payment ecosystem, improve the availability and usability of central bank money, facilitate diaspora remittances [and] reduce the cost of processing cash.
Officials in the West African country believe the e-Naira theoretically holds its value better than the country’s official currency, which has decreased by up to 40% over the past year. Bank officials have also tried to scale the adoption of the digital currency and recently held public campaigns encouraging locals to embrace the e-Naira. However, despite the claims made by the officials, the big question has been, “Do Nigerians find the e-Naira useful”?
CBDC Adoption in Nigeria is at a Low Rate
Nigeria has the most crypto-savvy community in Africa, but this has not been reflected in their sentiment toward the e-Naira. Chainalysis ranked Nigeria 11th globally and first in Africa for crypto adoption. Additionally, a KuCoin report noted that 35% of Nigerians between the ages of 18 and 60 either own or have traded crypto assets this year.
However, a Bloomberg report noted that less than 0.5% of the Nigerian population adopted the country’s official CBDC a year after it launched. According to Bloomberg, Nigerians have been perplexed due to the government’s lack of clarification following its crackdown on cryptocurrencies. In early 2021, the CBN banned banks from providing services to crypto exchanges. However, this move appeared to have made locals distrust the government’s CBDC and its elite.
Nigerians rely on crypto for economic reasons and as a hedge against inflation. Studies revealed that citizens prefer to save and transfer funds in crypto since the naira has lost value almost six times since 2015. Financial experts predict harder times for the currency in 2021, meaning Nigerians could further embrace crypto assets. In addition, most Nigerians believe the country does not need a CBDC.
Adesoji Solanke, director at the Lagos-based Renaissance Capital Emerging and Frontier Markets Investment Bank, thinks it is unsurprising that Nigerians are yet to adopt the e-Naira. According to him, the digital currency does not solve any real use cases or address the needs of Nigerians.
I have covered some exciting stories in my career as a journalist and find blockchain-related stories very intriguing. I believe Web3 will change the world and want everyone to be a part of it.
