Chinedu Albert, a legal expert specializing in Nigerian tech and innovation, has attributed the challenges facing the adoption of the eNaira, the Central Bank of Nigeria’s digital currency (CBDC), to a previous crypto ban.
He believes that the CBDC will only be successful if the crypto ban is lifted.
In an exclusive interview with Cointelegraph on December 29, Nigerian economist and eNaira founder Albert described the eNaira as an ambitious concept.
However, he observed that it reflects the government’s response to its “ill-advised” decision to enforce a sweeping ban on cryptocurrencies and other virtual assets on February 5, 2021.
Albert believes that the eNaira can help to stimulate economic growth in Nigeria by providing a more efficient and secure way for people to conduct transactions.
He also noted that the project has the potential to create new jobs and boost Nigeria’s digital economy.
Nigeria has been identified as one of the most promising countries for cryptocurrency adoption, according to a report by Chainalysis.
The country ranked sixth in the Global Crypto Adoption Index, boasting an overall score of 0.26%, slightly surpassing the United States at 0.22%.
This is a significant development, as Nigeria is one of the most populous countries in the world and is home to a large number of unbanked and underbanked individuals.
Albert, a digital currency enthusiast and critic, believes that the eNaira’s slow uptake can be traced to its vulnerability to government policies and inflation.
These key factors, he contends, are major contributors to the currency’s subdued adoption.
According to a May 2023 report from the International Monetary Fund (IMF), the average weekly eNaira transactions totaled 14,000, constituting only 1.5% of the total monthly transactions per wallet.
Albert also believes that the CBDC can play a role in developing the Nigerian economy. He explained that the CBDC can help to increase the flow of money within the country, as well as promote financial inclusion.
“The eNaira is an exercise in futility,” said Tobi Aremotobi, a digital finance expert based in Nigeria, in a viral comment in July 2023. “There are so many practical challenges associated with it that I don’t see how it can work.”
Aremotobi shared his experience with Tech Cabal, a local Nigerian media company, highlighting the practical challenges associated with eNaira. “The eNaira is a waste of time,” he said. “There are so many practical challenges associated with it that I don’t see how it can work.”
He mentioned that the phrase “I’ll pay you with eNaira” was used teasingly among colleagues, but in reality, spending money stored in the eNaira wallet posed significant hurdles.
The digital currency has yet to gain significant traction in Nigeria, with most merchants refusing to accept it, and a notable majority of tech-savvy individuals remaining unconvinced about its suitability for mainstream adoption.
The Nigerian government’s restriction on digital assets for banks and other financial institutions has been lifted, but the eNaira is still hovering around red zones.
This is due to the uncertain regulatory environment and the lack of infrastructure to support digital assets. Despite this, there is a lot of potential for the eNaira to grow in the future.
Nigerians Lack Enthusiasm for Africa’s First CBDC
Nigerians have shown limited enthusiasm for Africa’s first CBDC, raising concerns about looming crypto regulations in the future. While other African countries are exploring the potential of digital currencies, Nigeria has been hesitant to fully embrace the technology.
There are a number of reasons for this, including concerns about volatility and the lack of a clear regulatory framework. With the future of crypto regulation uncertain, it’s unclear whether Nigeria will ever fully embrace digital currencies.
A Distinct Hope for eNaira?
The IMF report on the eNaira underscores its objective to tackle Nigeria’s substantial informal economy.
This involves leveraging established local mobile money networks such as Kuda, oPay, and Flutterwave or constructing a retail access network. The Central Bank of Nigeria is considering two potential approaches for the eNaira.
eNaira offers a convenient and secure way to send and receive money across Africa. Recently, the CBN partnered with the African-focused financial technology firm Flutterwave to introduce eNaira as a payment option for merchants and financial institutions.
This partnership will provide a more efficient and cost-effective way for businesses and individuals to move money across borders.