While the Nigerian legislative body is optimistic about the country’s adoption of eNaira, there is still significant work to be done to enhance the digital infrastructure for financial practices in the country.
Nigeria is witnessing an increasing adoption of its Central Bank Digital Currency (CBDC) as the country’s fiat money scarcity intensifies. Almost eighteen months after the introduction of its in-house digital token eNaira, Nigerians have begun the mass adoption of the CBDC as uncertainty over its traditional currency rises. The acute cash deficiency is a consequence of the central bank’s decision to substitute older banknotes with bigger denominations amid rising inflation.
Even though developing nations like Nigeria were the reason why CBDC was touted to be an important virtual currency, its concept as a whole is still yet to mature.
Unfortunately, the lack of paper money has compelled Nigerians to buy eNaira as a safer substitute for money. In a nation where cash records for about ninety percent of the transaction, the value of eNaira transactions has risen by sixty-three percent to 22 Billion Nairas ($47.7 million). Moreover, in comparison to the stats on October 2022, the total number of CBDC wallets owned by Nigerians has also spiked by more than twelve times to 13 million.
However, the latest demonstration policy utilized by the Nigerian government has led to a drop in the cash in circulation. The currency circulation has reduced from 3.2 trillion Naira to 1 trillion Naira.
To compensate for such depreciation in physical cash, Nigeria minted more than 10 billion eNairas. Moreover, eNaira expenditure in government schemes and social expenditures also play a huge part in increasing CNBC’s adoption.
For developing countries like Nigeria, CBDCs offer a way to tackle the financial problems with the fiat economy, which also includes lowering operational expenses and solidifying anti-money laundering activities.
In a statement by Emefiele, it was said that eNaira has been a promising choice for citizens as an electronic payment channel for financial inclusion.
However, this is not it. The cash scarcity has also given way to another alternative opportunity for utilizing cryptocurrency. MetaMask’s parent company ConsenSys disclosed a novel MoonPay integration, which enabled Nigerians to buy crypto through bank transfers. The new attribute is accessible within the MetaMask mobile and Portfolio DApp, considerably streamlining the process of purchasing without using credit and debit cards in Nigeria.
While the Nigerian legislative body is optimistic about the country’s adoption of eNaira, there is still significant work to be done to enhance the digital infrastructure for financial practices in the country.
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