Nigeria’s central bank digital currency (CBDC) is not getting the warm reception expected from its crypto-savvy population.
This comes despite Nigeria being identified by Chainalysis as the top country in Africa for crypto adoption and ranking 11th globally, while a KuCoin report found that 35% of the Nigerian population aged 18 to 60 had owned or traded cryptocurrencies this year.
Bloomberg noted that Nigerians have been confused due to a lack of clarity from the state which cracked down on crypto last year.
In February 2021, the Central Bank of Nigeria banned banks from servicing crypto exchanges in an effort to sever fiat on and off ramps.
Educating people who are generally wary of the state and ruling elite has also become a challenge for the central bank, according to the report.
The #Nigerian eNaira is a central bank digital currency (CBDC) that launched 1 year ago, however only 0,5% of Nigerians are using it.
According to TripleA, more than 10% of the population own #Crypto.
Nigerians want Crypto, but they don’t want Government backed Crypto. pic.twitter.com/WaM8nmHxRg
— Crypto Rand (@crypto_rand) October 25, 2022
Furthermore, the naira has been devalued around six times since 2015, and economists expect a further 20% loss in value next year, as the economy has been further compounded by galloping inflation, which could make the push for a CBDC a hard sell to many of the country’s citizens.
According to the director at Lagos-based emerging and frontier markets investment bank Renaissance Capital, Adesoji Solanke, “the eNaira does not address any of these basic use cases, so no surprise at its low adoption rates so far.”
The disappointing figures are now prompting the Nigerian central bank to ramp up efforts to increase its adoption, including offering a 5% discount to drivers and passengers of motorized rickshaws that ply the city streets, according to the report.
In August, Nigerian Central Bank governor Godwin Emefiele announced the eNaira project entered its second phase in August with an adoption target of eight million users.
At the time, he added that the CBDC has had about 840,000 downloads, with about 270,000 active wallets. By August, there had been around 200,000 transactions worth 4 billion nairas — approximately $9.5 million at the time.
According to the Atlantic Council’s CBDC tracker, Nigeria is one of eleven countries to have fully deployed a central bank digital currency, the other ten are in the Caribbean.