The Central Bank of Nigeria has announced plans to remodel its digital currency, the eNaira. This is the latest of a series of updates as the country continues to devise ways and methods to attract users to its castaway Central Bank Digital Currency (CBDC).
According to a post on the Central Bank of Nigeria’s X (formerly Twitter) account on Wednesday morning, the country would be changing its eNaira model. In the statement credited to the CBN’s acting governor, Folashodun Shonubi, the apex bank stated that this new move is geared towards encouraging increased usage, participation and volumes.
The CBN is amending the current model of the Central Bank Digital Currency (CBDC), the eNaira, to ensure an increase in the volume and activity of wallet holders.
Recall that the West African country’s eNaira has endured a difficult time regarding acceptance and utilisation amongst the citizenry since its launch in October 2021. The administration of the suspended CBN governor, Godwin Emefiele, made several attempts to drive its adoption. But despite those, Nigerians haven’t found it appealing or useful.
The journey of the eNaira
On October 25, 2021, the CBN, under the now-embattled ex-Governor, Godwin Emefiele, launched the eNaira, making Nigeria the first African country to launch a CBDC. Almost two years after its celebrated launch, the eNaira still struggles for relevance with most Nigerians as public reception remains largely underwhelming.
In February, we reported that the CBN was in talks with new “technology partners” to develop a new and improved system to manage the government-backed digital currency. This was in a bid to develop its own software for the digital currency so that it can keep full control of the effort.
In February-March, at the peak of the cash crunch that plagued the nation, there was a semblance of life for the eNaira as it was reported that eNaira transactions increased 63% to 22 billion Naira ($47.7 million) since its introduction.
According to the data announced by the then CBN Governor, the number of eNaira wallets increased by more than 12 times to 13 million compared with the data obtainable in October 2022.
“The eNaira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions.” – he said .
However, in May, the International Monetary Fund (IMF), in a research paper titled ‘Nigeria’s eNaira, One Year After’, said that the adoption of the eNaira had remained significantly low, with a whopping 98% of the digital wallets unused.
“The average number of eNaira transactions since its inception amounts to about 14,000 per week—only 1.5 per cent of the number of wallets out there. This means that 98.5 per cent of wallets, for any given week, have not been used even once,” the IMF said.
In reference to the number of downloads, the institution noted that the adoption has been “disappointingly low”, given the region’s financial inclusion and remittance challenges.
Shortly after that was the advent of the Bola Tinubu’s administration where the CBN Governor, Godwin Emefiele was arrested on terrorism financing charges. Since then, nothing significant has been heard about the eNaira until today, although there were reports that the eNaira app was upgraded earlier in July.
What is next?
At press time, explicit details about the alteration of the eNaira by acting Governor Folashodun Shonubi have not been disclosed. However, the new administration needs to come up with a novel strategy to make the CBDC appealing to Nigerians.
The only way to truly foster widespread adoption of the eNaira is 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.
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