A Year Later, Has E-Naira Beat Private Crypto Adoption?

It has been a year since Nigeria launched Africa’s first central bank digital currency (CBDC)., But reports suggest that the backlash is overwhelming.

In its recent report, Bloomberg reported that digital currency adoption in Nigeria is less than 0.5%. Despite pressure from the government. The Central Bank of Nigeria launched the e-Naira website in September last year. On 25 October 2021, soon after its official launch.

Lack of use cases for e-Naira

This launch was due to the increasing use of private cryptocurrencies in the region. According to local reports, President Muhammadu Buhari had predicted at its launch last year that e-naira would boost remittances, boost cross-border trade, enhance financial inclusion and make it easier for the government to pay for welfare .

However, according to Bloomberg research, Nigerian sovereigns are unable to differentiate between digital money e-naira and bitcoin or any other cryptocurrency. This is when the government tried to push adoption among motorized rickshaw operators by offering a 5% discount.

“Inara does not address any of these basic use cases, so its low adoption rate so far is no surprise,” Adesoji Solanki, director of Renaissance Capital in Lagos, told the media outlet.

Babatunde Obrima, Chief Operating Officer of the Fintech Association of Nigeria, believes “they” [Younger Generation] See the regulator as hostile to them and therefore not interested in anything it has to offer.”

Other challenges to CBDC adoption

BeInCrypto reported earlier this year that inflation is another reason why younger generations have abandoned Naira for cryptocurrencies. In September, inflation rose to a 17-year high of 20.8% from 20.5% recorded in August.

Another reason why e-naira has reduced adoption is the legislative barriers to cross-sectoral transactions. Chainalysis in its 2021 research found that Africa is a significant market for P2P platforms due to regulatory barriers introduced against crypto businesses. With restrictions on transfers abroad in some regions. For example, Nigeria has made it challenging for customers to transfer money from their bank accounts to crypto businesses. This has limited remittances from the country, according to the analytics firm.

Despite the challenges, the country’s apex bank is optimistic. Celebrating the e-Naira launch last week, Central Bank of Nigeria (CBN) Governor Godwin Amephile said, “We have provided all the necessary infrastructure that will enable us to travel cashless nationwide,”

As quoted by African Business, Amphiele said that with other central banks preparing to launch CBDCs, Nigeria could educate the rest of the world with the experience it has accumulated in the area.

According to the Atlantic Council, 95% of the world’s GDP, or 105 countries, are considering CBDCs. Meanwhile, according to the report, a digital currency has been fully introduced in at least ten countries.

Image reprinted from The Atlantic Council

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