Nigeria’s central bank has upgraded the eNaira to steer the country away from crypto.
The Central Bank of Nigeria (CBN) is moving forward with plans to upgrade the country’s central bank digital currency (CBDC), eNaira so that it can be used to purchase a broader range of goods and services. It also maintains strict crypto restrictions, which are crippling the country’s fintech sector.
According to a Vanguard report, CBN Branch Controller Bariboloka Koyor spoke on May 9 at a market in the country’s most populous city of Lagos as part of a campaign to “sensitize” businesses to the eNaira. According to Koyor:
“Starting from next week, there is going to be an upgrade on the eNaira speed wallet app that will allow you to do transactions such as paying for DSTV or electric bills or even paying for flight tickets.”
Koyor stated that the upgrade was launched to facilitate onboarding, highlighting its wallet that had no fees and was faster than internet banking. He added that in the future, the entire will be the only way to receive government financial assistance, emphasizing the benefits of early adoption.
“This is a project that the CBN has rolled out to reach every Nigerian in terms of financial inclusion and terms of efficiency, reliability, and safety of banking transactions so that we can do banking transactions very easily and safely and the people in Nigeria can enjoy the benefit of the eNaira.”
The value of the naira has fallen by more than 209 percent in the last six years, prompting a flood of cryptocurrency adoption among Nigerians. According to an April report from the KuCoin crypto exchange, approximately 33.4 million Nigerians owned or traded cryptocurrencies in the previous six months.
After the launch of the eNaira in October 2021, restrictions on crypto trading in the country were tightened. The CBN prohibited banks from servicing cryptocurrency exchanges in February of the same year, but real enforcement occurred in November 2021, when the CBN ordered the accounts of two cryptocurrency traders to be frozen.
This crackdown prompted commercial banks in the country to monitor their customers’ accounts for signs of cryptocurrency trading, which could result in accounts for fintech businesses being flagged.
In an April report jointly published by the Secretary Generals of the Organization for Economic Cooperation and Development (OECD) and the United Nations, trade restrictions were cited as a source of concern (UN).
The report centered on Africa’s urbanization and stated that young Africans working in the tech sector “creating apps or trading digital currencies” were vulnerable to arbitrary government policies. It used Nigeria as an example, saying:
“The restrictions on cryptocurrency transactions…in Nigeria have crippled foreign direct investment in the fintech industry and negatively impacted millions of young Nigerians who earn a living from the sector. Many have found a way, however, to lawfully bypass these restrictions and continue the business, effectively denying Nigeria the taxes and transaction fees that would otherwise come into the system”
CBDC adoption shows no signs of slowing; according to recent research, 80 percent of central banks are considering a CBDC. Tanzanian officials announced on May 10 that their CBDC plans are moving forward.
In a Bloomberg interview, Bank of Tanzania Governor Florens Luoga stated that the country sent officials to countries with CBDC experience, including Nigeria, to learn directly from them, citing concerns about “cryptocurrency speculators.”
