Digital naira

2023: Only 4% of the population use digital naira

Over the three years of the experiment on the introduction of digital naira and the ban on the circulation of banknotes with large denominations, only 4% of the population managed to motivate the use of digital naira by the Central Bank of Nigeria.

Subsequently, the experiment was declared unsuccessful. The head of the Central Bank of Nigeria was removed and a criminal case was opened, but subsequently released on bail.

2022

Nigeria Central Bank limits cash issuance at ATMs to $255 a week to transfer population to national cryptocurrency

On December 6, 2022, the Central Bank of Nigeria (CBN) announced the introduction of new restrictions on cash withdrawals from ATMs: the daily limit was lowered to 20 thousand naira (approximately $45) instead of the previous 150 thousand naira. This initiative is aimed at increasing the popularity of digital payments and at transferring the population to the national cryptocurrency eNaira.

The new rules, in addition to day restrictions, provide for the setting of weekly limits for withdrawing money from ATMs. This is 100 thousand naira (approximately $225) for individuals and 500 thousand naira (about $1,125) for representatives of the business sector. In case of exceeding these amounts, a commission of 5% and 10%, respectively, is established. The approved measures will enter into force on January 9, 2023. The CBN said that the rules are designed to encourage the transition to alternative ways to carry out financial transactions - internet banking, mobile banking applications, plastic cards, as well as eNaira.

Nigeria Central Bank limits cash issuance at ATMs to $255 a week

The restrictions adopted were another effort by the central bank to reduce the use of cash and strengthen the ecosystem of digital payments. The fact is that in the mainly informal economy of Nigeria, cash outside banks accounts for 85% of the total currency in circulation, and almost 40 million adult residents do not even have bank accounts. The new measures are expected to help improve the availability of banking services for the local population.

The rules not only severely restrict the use of cash, but are a step towards pushing Nigerians to move more actively to eNaira. This digital currency of the country's central bank was rolled out in 2021 but has faced a slow spread among citizens. The approved restrictions should be a kind of catalyst for eNaira.^[1]

Nigerians switch massively to national cryptocurrency

On August 18, 2022, it became known that the digital currency of the central bank of Nigeria, eNaira, has been used to conduct transactions in the amount of $9.3 million since its introduction in October 2021. This was reported in the local Central Bank.

The head of the Central Bank of Nigeria (CBN) Godwin Emefile called the volume and cost of transactions on the platform remarkable, noting that the eNaira application was downloaded 840,000 times and as of August 2022 has about 270,000 active wallets.

Why Nigerians are switching massively to national cryptocurrency

Nigeria has a population of about 200 million by August 2022, and it is the largest economy in Africa with a gross domestic product of about $430 billion. However, it is estimated that about 40% of the population does not have bank accounts, including 59 million adults who do not use banking services, and the CBN intends to resolve this issue using the central bank's digital currency. At the second stage, CBN seeks to ensure that another 8 million users start using the eNaira platform. This phase will begin in early September 2022, when Nigerians, both in and out of banks, will be able to open the eNaira wallet by typing a four-digit code on their mobile phone.

Amid a fairly rapid drop in the value of naira, Nigerians are switching to cryptocurrencies to keep their capital. Nigeria is one of the countries with the maximum number of cryptocurrency investors. As of August 2022, the exchange rate of the national currency on the official market is 424.34 naira for $1, but in fact the rate corresponds to the black market. The Association of Exchange Operators of Nigeria confirms that the popularity of cryptocurrencies is growing, and confidence in naira is falling, while the Central Bank of the country has banned banks from conducting transactions with cryptocurrency. Local investors are switching to platforms where bitcoin is sold for a dollar. On the Binance exchange alone, Nigerians carried out 103,691 deals with bitcoins per day, and in the first quarter of 2022 the amount of transactions amounted to $185 million.^[2]

2021: Nigeria launches its own digital currency

Nigeria launched its own digital currency on October 25, 2021. This happened a few months after the local Central Bank banned banks and financial institutions from dealing with cryptocurrencies or facilitating operations with them.

President Muhammadu Buhari said that the digital currency and the technology used in it blockchain could contribute to economic growth and increase GDP the largest economy Africa by $29 billion until 2031.

The head of the Central Bank of Nigeria (CBN) Godwin Emefile said that about 500 million digital naira worth $1.21 million have already been created due to the introduction of digital currency into circulation. The CBN noted that the launch of electronic naira marks an important step forward in the evolution of money, and the regulator intends to ensure that electronic naira, like physical, is available to every citizen of the country.

Nigeria's Central Bank unveils its own digital currency

Blockchain-based digital currencies are rapidly gaining popularity around the world, and Nigeria is the first African country to officially launch a pilot project for a state-backed digital currency. With a total population of 211 million, the Nigerian CBDC trial becomes the second largest after the Chinese digital yuan. In addition, more than 62% of Nigerians, are people aged 24 and younger, making e-naira available to the public due to the fact that young people are heavily digital oriented.

With Nigeria still considered one of the most non-banking countries in the world, decentralized identification systems and CBDCs will provide the public with the opportunity to confirm their identity and access banking services directly from a smartphone. It also means that every transaction will go through this system to buy and sell things, "said Smartlink co-founder Ben Constancy.

E-naira was developed by fintech company Bitt, whose digital currency management system is also behind the East Caribbean Central Bank's DCash digital currency. Among the goals that the CBN sets for itself is to digitize payments and expand financial inclusion, and the CBDC can offer citizens greater access to financial services for those who do not have or use bank accounts. Citizens of the country who send remittances will also benefit given the currency restrictions and high fees associated with sending money to and from Nigeria, Nigerians in 2019 used bitcoin as a faster and cheaper alternative to make domestic and international transactions.^[3]

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