Nigerian banks compelled promote Nigeria’s low-cost central bank digital currency e-Naira due to concerns about loss of revenue.
E-Naira offers a free alternative to traditional money transfers. However, only 700,000 users have created an e-Naira wallet since the launch of the currency in October 2021. This number is incredibly low considering that there are almost 55 million bank accounts in Nigeria.
Lenders do not want
Nigerian Central Bank Governor Godwin Emefiele commented on the low level of implementation and said:
“There is apathy [towards e-Naira] in banks.”
Nigerian banks have invested heavily in digital banking to create additional fee-based revenue streams. In general, everything that e-Naira offers undermines this investment because it is a low-cost alternative to money transfers, and deposits in e-Naira wallets do not count as cash on creditors’ books.
Currently, e-Naira wallets are only available to bank customers. To increase adoption, the Central Bank of Nigeria is partnering with Africa’s largest mobile operator. MTN Group give Nigerians who do not have bank accounts access to e-Naira wallets.
Emefilier mentioned the new project and said it was “nearly completing testing”.
Nigeria on cryptocurrency
Nigeria is one of the countries with the highest level of cryptocurrency adoption. In 2021, Nigeria was one of the countries that experienced 880% global cryptocurrency growth in one year. At the time, 24.2% of all Nigerians invested in at least one digital asset, while bitcoin was the most popular choice with over 60%.
Gemini Cryptocurrency Global Status in 2022 report showed that the level of national ownership increased to 26% in 2022. In addition, 63% of Nigerians believe that cryptocurrency is the future of money. Over 44% of non-crypto holders also said they are interested in buying crypto in the next year.
While the public is confident about how it feels about cryptocurrencies, the Nigerian government seems to be in an intermediate position. The country decided to work on e-Naira in September 2021. At the time, officials said they were considering making e-Naira legal tender as “85% of central banks are considering adopting digital currencies in their countries.”
A month later, the government announced an indefinite suspension of the e-Naira project as “other key events were planned to commemorate the country’s 61st independence anniversary.”
Despite this, e-Naira was launched the same month, in October.
About two weeks after the launch of e-Naira, the Central Bank of Nigeria ordered the country’s financial institutions to close all cryptocurrency-related bank accounts.
Currently, the ban on bank accounts associated with cryptocurrencies is ongoing, although crypto trading is still legal in the country.
Credit : cryptoslate.com