Nigeria, the most populous country in Africa, had a severe cash shortage, which enhanced the adoption rate of its digital currency, the eNaira.
Nigeria is the first African country to introduce a national digital currency. After its introduction, the initiative had a poor acceptance rate among the populace. But the current cash scarcity caused by new banking laws and withdrawal limitations has compelled people to choose digital alternatives.
Godwin Emefiele, the governor of the Central Bank of Nigeria, revealed that the CBN issued more than 10 billion eNaira, of which about 3.4 billion are in circulation. In addition, the Nigerian government is promoting the usage of this digital money by utilizing it for social payments. This program has supplied 4 million new wallets for underprivileged Nigerians.
According to Emefiele, the digital currency has become the preferred electronic payment route for financial inclusion. In addition, it functions as a blueprint for social involvement in the Nigerian economy.
Adesoji Solanke, a Nigerian director at Renaissance Capital, discussed the eNaira. He noted that while the administration desires more citizen adoption, the available routes are restricted. According to him, the greatest obstacle is the prerequisites since consumers must own a smart gadget and an internet connection.
By 2025, the number of smartphone users in Nigeria is expected to surpass 140 million. The number of Nigerian smartphone users is roughly estimated to be between 25 and 40 million.
Solanke remarked that most transfer recipients are impoverished and may find the plan challenging. He feels that a smart gadget and internet connection may be too expensive for these people.
Godwin Emefiele, the governor of the Central Bank of Nigeria, said that eNaira transactions are increasing. Since its introduction, he noted a 63% growth of up to 22 billion Naira ($47.7 million) in transactions.
Recent demonetization measures have decreased the amount of fiat cash circulating in the nation. In September 2022, the quantity of currency in circulation fell from its initial value of 3,2 trillion Naira to 1 trillion Naira. Since October 2022, CBDC wallets have surged to 13 million, 12 times their prior worth.
The informal sector and commerce in Nigeria depend on cash for around 90 percent of transactions, and the Central Bank of Nigeria’s (CBN) new monetary policies have prompted significant criticism. The central bank conducted a cash exchange for 200, 500, and 1,000 Naira notes with older denominations.
Due to massive demonstrations and chaos, the Nigerian Supreme Court has ordered that the old and new notes remain in circulation until December 2023. In Nigeria, digital currencies are a relatively new notion, and rural regions lack essential data. It will take longer to document significant adoptions.
In addition, a prior restriction on cryptocurrencies in Nigeria may have impeded the use of digital currencies. Despite the relative expansion of the eNaira, there remains a great demand for education, particularly among the uneducated.
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