Nigeria’s ambitious venture into digital currency, the eNaira, has encountered significant hurdles in achieving widespread adoption, with transaction volumes remaining low since its inception in October 2021. Despite being introduced by former President Muhammadu Buhari as a means to bolster financial inclusion and reduce reliance on cash, the digital equivalent of the naira has struggled to gain traction among Nigerians.
According to recent data, transactions worth only N29.3 billion have been conducted using the eNaira, highlighting a slow uptake among consumers and merchants alike. This figure pales in comparison to the staggering value of electronic transactions in Nigeria, which amounted to N611.06 trillion in 2023 and N237 trillion in the first quarter of 2024.
The International Monetary Fund (IMF), in its Nigeria ‘Staff Report for the 2024 Article IV Consultation,’ acknowledged the sluggish adoption of the eNaira. With only 13 million eNaira wallets created thus far, the majority of which remain inactive, the IMF highlighted concerns regarding data privacy and the need for adequate safeguards against financial crimes.
Despite efforts by Nigerian authorities to promote eNaira utilization, challenges persist. The eNaira is currently accessible only to individuals with bank accounts, limiting its reach across the population. To address this limitation, the Central Bank of Nigeria (CBN) is piloting a program to enable smartphone users without bank accounts to access and utilize the eNaira, aiming to stimulate adoption.
The IMF’s disclosure in May 2023 that 98.5% of eNaira wallets were inactive further underscored the challenges facing the digital currency. While the average transaction value stood at 923 million naira per week, public adoption of the eNaira has fallen short of expectations, with concerns raised about its viability as a mainstream digital currency.
Despite Nigeria’s pioneering role as the first African country to launch a CBDC, doubts persist regarding the eNaira’s future. The circulation volume of the eNaira, which stood at N9.78 billion as of August 2023, has seen marginal growth, reaching N13.98 billion by the end of the same year.
Efforts by the CBN to salvage the eNaira project have been met with mixed results. A memorandum of understanding signed with a blockchain firm in March 2024 aimed to accelerate eNaira adoption, yet questions remain regarding the digital currency’s long-term viability.
With indications suggesting the eNaira’s fate may be sealed, the CBN is reportedly developing a new CBDC named cNGN, to be managed by tier-one banks. Unlike the eNaira, which is solely managed by the CBN, the cNGN token represents a shift in strategy aimed at overcoming the challenges hindering the widespread adoption of digital currency in Nigeria.
