Updated on January 9, 2023 12:51 PM
A year after its introduction, the government-issued digital currency, the eNaira, is only being used by less than 0.5% of Nigeria's 217 million people, according to a Bloomberg report. This indicates that the people of Nigeria, who are well-versed in cryptocurrencies, are not responding positively to Nigeria's central bank digital currency (CBDC).
Despite Nigeria being ranked 11th globally and first in Africa for crypto adoption by Chainalysis, 35% of Nigerians between the ages of 18 and 60 reported owning or trading cryptocurrencies this year, according to a KuCoin report.
TMC, previously reported small retail payments have been the driving force behind extraordinary cryptocurrency adoption and usage in Sub-Saharan Africa. According to a survey from the blockchain company Chainalysis, the region carried out the greatest percentage (80%) of cryptocurrency retail payments under $1,000 in the entire world. The study emphasized how peer-to-peer (P2P) transactions have increased more frequently in Sub-Saharan Africa than elsewhere. Africa's P2P transactions dwarf Central and Southern Asia and Oceania, which currently have the second-highest daily transaction volumes for cryptocurrency, accounting for close to 6% of the total amount of crypto transactions.
According to the report, Africans have begun incorporating cryptocurrencies into their daily lives. Remittances and business transactions, in addition to retail transactions, have been important factors in Africa's high adoption and usage rates.
In an effort to close the fiat on and off ramps, the Central Bank of Nigeria forbade banks from providing services to cryptocurrency exchanges in February 2021. According to Bloomberg, Nigerians have been perplexed as a result of the state's lack of clarification following its crackdown on cryptocurrencies last year.
According to the report, the central bank is having trouble educating individuals who are generally suspicious of the government and the ruling class.
"The eNaira does not address any of these basic use cases, so no surprise at its low adoption rates so far," says Adesoji Solanke, director of emerging and frontier markets investment bank Renaissance Capital in Lagos. Additionally, the naira has lost value almost six times since 2015, and economists predict a further 20% loss in value next year as the economy is further hampered by soaring inflation. As a result, many Nigerians may find it difficult to support the creation of a CBDC.
According to the report, the central bank of Nigeria is now intensifying attempts to encourage adoption in response to the unsatisfactory results, including providing a 5% discount to operators and riders of the motorized rickshaws that traverse the city's streets.
The eNaira project launched its second phase in August, according to announcements made by Godwin Emefiele, governor of the Nigerian Central Bank, with an eight million user adoption target. He stated at the time that the CBDC has seen roughly 840,000 downloads and 270,000 active wallets. At the time, around 200,000 transactions totaling 4 billion naira, or about $9.5 million at the time, had been made by the end of August.
According to the Atlantic Council's CBDC tracker, Nigeria is one of eleven nations—the other ten are in the Caribbean—that have completely implemented a central bank digital currency.