Nigeria Leads Africa And Launches A CBDC, Despite Usage Uncertainties

Nigeria became the first nation on the African continent to delve into the CBDC realm, as Nigeria‘s President Muhammadu Buhari officially announced the eNaira launch. The digital currency is a collaboration with the fintech company Bitt, which also announced the launch.

According to Buhari, the CBDC launch is the culmination of several years of research by the Central Bank of Nigeria (CBN). The President also noted that the core aim of the eNaira project is to expand the boundaries of payment systems to make financial transactions easier and more convenient.

“We have become the first country in Africa and one of the first in the world to have introduced a digital currency for our citizens,” Buhari added.

The government of Nigeria seeks to promote and aid cross-border remittances and financial inclusion for persons outside the formal Nigerian economy. The new asset would work in conjunction with the fiat currency in Nigeria, the Naira, and pegged to the price of the fiat currency.

“eNaira marks an important step in the evolution of money and CBN is committed to making eNaira, like physical naira, accessible to everyone.” CBN Governor Godwin Emefiele added.

The first batch of eNaira is set at 500 million, which is approximately $1.21 million. Furthermore, two cryptocurrency applications have been deployed in the Google Play and Apple stores – the eNaira settlement wallet and the eNaira merchant wallet.

The Nigerian government expects the CBDC to expand the nation’s gross domestic product by $29 billion in a decade.

However, the CBDC launch makes a sharp contrast with Nigeria’s issues with the growth of cryptocurrency activity in the country, which ultimately led to a China-like ban on cryptocurrency transactions in the banking sector in February this year.

However, Nigeria’s central bank postponed the scheduled for Oct. 1 launch, due to the country’s independence celebrations. Further uncertainties include the CBN not clarifying if users can exchange eNaira for traditional Naira, nor can they trade the eNaira for other cryptocurrencies.

Furthermore, the Lead Director of the Centre for Social Justice (CSJ), Eze Onyekpere, raised his voice of doubt, adding that the eNaira adds “no spectacular value” to the economy.

“I think the important thing right now is what adds value to the economy in terms of job creation, stabilizing our currency, economic growth, and reducing the run on the Naira. So all these, be it e-money or x-money, is not adding any spectacular value; it’s just a different format of the money available.” Onyekpere noted.