Nigeria’s eNaira Adoption Stalls at 0.36% of Currency

• Nigeria’s eNaira, despite being Africa’s first CBDC, represents only 0.36% of the total currency in circulation
• While the number of eNaira tokens has surged by 1,900% since October 2021, adoption remains slow
• Experts argue that eNaira offers few advantages over traditional naira, and access is restricted to those with bank accounts

eNaira, Nigeria’s central bank digital currency, was a big deal as Africa’s first CBDC.

But it hasn’t really taken off. Even though it represents only 0.36% of the money in circulation, the number of eNaira tokens has shot up by 1,900% since it was launched. 

It’s a bit surprising that there’s been a slow uptake, given how excited Nigerians are about traditional cryptocurrencies like Bitcoin and stablecoins. It seems that eNaira might not be offering enough extra benefits over regular naira, which raises questions about its role as a financial innovation.

Adoption Slows Despite Token Surge

It’s been almost three years since eNaira, Nigeria’s central bank digital currency (CBDC), was launched, and it currently represents just 0.36% of the money in circulation, according to the Central Bank of Nigeria (CBN).

However, the data shows that the 13.98 billion eNaira tokens in circulation by the end of Q1 2024 are a whopping 1,900% more than in October 2021. Even though there’s been growth, the slow adoption of the CBDC contrasts with Nigerians’ enthusiasm for digital assets like Bitcoin and stablecoins.

Despite ongoing efforts to curb cryptocurrency and stablecoin use, Nigeria remains one of the biggest and most significant crypto markets globally.

Meanwhile, as we reported earlier, the CBN is trying to get people interested in eNaira by offering rewards to residents and merchants who accept the digital currency.

They’ve also teamed up with tech company Gluwa in early 2024. They’re hoping this will make eNaira more useful and help drive financial innovation through blockchain technology. Despite these efforts, interest remains low.

Some are even calling the CBDC project a failure. A report from July 29 by Nigerian publication Business Day described eNaira as a flop. Local experts agree that it hasn’t lived up to expectations.

Limited Knowledge of the CBDC

Ndubuisi Ekekwe, who’s the president of Tekedia Capital, says that eNaira hasn’t really caught on because it doesn’t offer any real benefits. Ekekwe says, “With digital wallets, virtual accounts, USSD, and other options available, I don’t think eNaira is making much of a contribution to Nigeria’s economy]..[ It doesn’t make you any more money than the old Naira, nor does it help you earn more than traditional Naira.“

Obinna Iwuno, president of the Stakeholders in Blockchain Technology of Nigeria (SIBAN), says the slow adoption is probably because Nigeria was one of the first countries to launch a CBDC, so there wasn’t a lot of knowledge about how to implement it.

The International Monetary Fund (IMF) thinks that the slow uptake is partly because eNaira is currently only accessible to Nigerians with bank accounts.

The IMF points out that there’s a challenge in making eNaira available to everyone while also making sure there are solid financial safeguards in place to prevent it being misused for financial crimes.

Conclusion

In a nutshell, eNaira has faced a lot of resistance, even though the Central Bank of Nigeria has been trying to promote it. The increase in the number of tokens hasn’t led to more people using it or integrating it into their everyday financial activities, which suggests that it isn’t widely accepted. 

It seems that the slow uptake is probably down to people thinking that it doesn’t add much value compared to traditional naira and that it’s not that easy to get hold of the CBDC. 

If eNaira is going to make a real impact, the Central Bank is going to have to tackle these issues. They might want to think about revising their strategies and offering more incentives to encourage more people to use eNaira and integrate it into Nigeria’s financial system.