Nigeria to partner with US company in bid to save the struggling eNaira

Temitope Akintade

The Nigerian authorities continue to devise ideas to improve acceptance of its CBDC, the eNaira. This time with a backup plan. According to a Bloomberg report on Tuesday, the Central Bank of Nigeria (CBN) is in talks with new “technology partners” to develop a new and improved system to manage the government-backed digital currency. 

The report says the CBN wants to “develop its own software for the digital currency so that it can keep full control of the effort”. Per sources, the Nigerian financial body has discussed those plans with R3, a New York-based technology firm. 

Specifically, new software for the eNaira will be created to allow the CBN to have complete control over the initiative. However, the unnamed source reportedly said the matter is confidential, so explicit details are not yet disclosed. 

Recall that the financial software company, Bitt commenced the process to create the Nigerian eNaira in 2021. But according to the Bloomberg report, the new partner, R3, will not take over Bitt’s role immediately but will help phase in total control for the Nigerian central bank.

Bitt confirmed in a statement that it is aware that the CBN works with various partners for its technological innovations. However, it still works closely with the CBN and is “currently developing additional features and enhancements.”

eNaira struggles 

On October 25, 2021, the CBN launched the eNaira, making Nigeria the first African country to launch a CBDC. It is, however, noteworthy that the launch came seven months after cryptocurrency transactions were banned in Nigeria.

President Muhammadu Buhari and CBN governor, Godwin Emefiele at the launch of the eNaira
President Muhammadu Buhari and CBN governor, Godwin Emefiele at the launch of the eNaira

By and large, almost 16 months after its celebrated launch, the eNaira still struggles for relevance with most Nigerians as public reception remains largely underwhelming. 

According to stats released during its first anniversary in October, the digital currency recorded 700,000 transactions worth ₦8 billion. Since then, no figures have pointed to a surge in acceptance or usage among Nigerians. 

Related post: One year after launch, eNaira struggles with low adoption with ₦8bn volume from 700,000 transactions

With around 0.5% of Nigerians using the CBDC, the ambitious project is close to dead. Numbers don’t lie. It is a pointer that Nigerians are not enthusiastic about using the initiative.

What next with the eNaira after this revamp?

To improve the perception of digital currency among consumers, the CBN is now turning to the earlier mentioned New York tech firm to revamp the underlying technology.

During its launch, President Muhammadu Buhari said that the eNaira and its underlying blockchain technology could increase Nigeria’s Gross Domestic Product (GDP) by $29 billion over the next ten years. At its first anniversary, Godwin Emefiele, the CBN Governor, also disclosed that the next adoption phase would target about 8 million unbanked users.

This revamp is apparently geared towards that goal, but the fact remains that it wouldn’t reduce the scepticism Nigerians have about the project. The digital currency offers little or no novel alternative to what is already attainable. It does not address cross-border transactions. Also, it defeats the essence of blockchain technology by being controlled by a centralised authority. 

Read also:: Will the latest Naira redesign affect adoption of the eNaira? 

Additionally, there is an active pushback against CBDCs from ‘blockchain activists’ who see government-backed digital assets as a surveillance tool.

eNaira

Despite its heavy promotion, Nigerians have always disclosed their displeasure with the eNaira. The purported revamp would not be enough to convince citizens who appear to have lost faith in the apex financial system, with the recent naira redesign and scarcity drama worsening as the days pass.

With these, the Nigerian authorities need to find a way to make the eNaira more attractive to everyday Nigerians, especially retail business owners, with a considerable number of them still oblivious to the existence of the eNaira and its offerings.

If the CBN Governor is intentional about its plans to “deepen the integration of the eNaira with the existing national payment infrastructure” as the next phase of adoption targets about 8 million unbanked users, the financial system needs to develop stronger strategies to achieve greater penetration among the population. 


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