CBN Bets On eNaira Revival Despite Waning Public Interest
BY BUKOLA ARO-LAMBO
Over three years after it was first launched, the Central Bank of Nigeria(CBN) is planning a comeback for its Central Bank Digital Currency (CBDC), the e-naira, a project that has since lost steam for many Nigerians as 98 per cent of the eNaira wallets already inactive.
Nigeria had been among the few countries in the world to successfully venture into CBDC and the first African country to do so. Currently, there are three CBDCs that are currently officially issued, the Sand Dollar in The Bahamas, Jam-Dex in Jamaica and the eNaira. Launched in October 2021, the enaira had been designed to not only ease digital transactions but to also make it cheaper.
Within months of its launch, the eNaira application had seen nearly 840,000 downloads, with about 270,000 active wallets comprising over 252,000 consumer wallets and 17,000 merchant wallets. Also, volume and value of transactions on the platform had reached above 200,000 and N4 billion, respectively.
However, following the exit of the former governor of the CBN, the CBDC project had lost steam as many Nigerians who had downloaded the application had abandoned it. Data from the CBN showed that the value of the eNaira in circulation had grown from N0.94 billion in December 2021 to N2.55 billion, and N13.98 billion as at the end of 2022 and 2023 respectively showing significant increase in its per centage of the total currency in circulation.
Whilst the figure had further increased to N18.35 billion by the end of September last year, latest CBN data showed a slight decrease in the month of October 2024. At the end of last year, the eNaira had further moderated by 0.19 per cent to N18.31 billion. This showed that nearly four years after its introduction, the eNaira still accounts for less than one per cent of the total currency in circulation which was N4.55 trillion at the end of October 2024.
A look at the application for both Android and Apple phones showed that there has been no support for the application for more than one year with the last update being in May 2023. A user of the app, Baffa Halliru had complained that after a year of trying to reach the customer service, he is yet to get his issue resolved. “It’s been almost year I’ve complained about my failed transaction and yet still I never get any feedback from you people, I’ve called and chat with you via in app chat, sent several emails. Very Bad Experience” he wrote giving the app one star rating.
This has, however, not deterred, Nigerian’s from downloading the application as the Governor of the CBN, Olayemi Cardoso had restated the plan of the apex bank to resuscitate the digital currency in 2025.
Speaking at the 2024 Bankers Dinner, Cardoso had stated that, the CBN will, in 2025, undertake a comprehensive review of its implementation to optimize broad and positive economic impact. This, he said, is in line with the Payment System Vision 2025 initiative which is aimed at enhancing confidence in the Nigerian payment system.
He said, the plan is to drive initiatives that will “encourage quick and affordable cross-border payments, a critical step toward unlocking trade, investment, and economic growth. Additionally, the e-Naira, our Central Bank Digital Currency (CBDC), holds significant growth potential.”
Last year, the CBN had released the Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2024-2025 document. According to the document, the CBN plans to work towards enabling the use of eNaira Wallet/Channels by payers to pay into government accounts at the CBN, and, allow Ministries, Departments and Agencies (MDAs) to initiate vendor/beneficiary payments from their respective eNaira Wallets.
With a version 2.0 in the pipeline for the digital currency, it is CBN is planning to collaborate with both federal and state governments to drive adoption, as well as the deployment of eNaira version 2.0, which focuses on expanding the role of deposit money banks in its usage.
Other planned features include offline functionality and programmable money, which will further integrate the eNaira into both online and offline government activities. The document noted: “The CBN issues and regulates the eNaira, a digital form of the fiat currency. The eNaira offers several benefits which includes faster and cheaper payments, increased financial inclusion, and reduced fraud, amongst others.
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“The CBN shall sustain efforts in enhancing the eNaira and driving its adoption. This includes the deployment of eNaira version 2.0 with focus on wholesale Central Bank Digital Currency (CBDC) to increase the participation of deposit money banks and empower them to drive its adoption; implementation of offline functionality, programmable money; and more collaboration with Federal and State Governments to increase its adoption.”
Meanwhile, the International Monetary Fund (IMF) had scored the eNaira low on adoption citing slow growth in eNaira wallet downloads among retail users. The IMF in a report had pointed out that 98.5 percent of eNaira wallets were unused one year after its launch, suggesting that the bulk of the wallet holders were inactive.
“In Nigeria, the slowness in eNaira uptake can be partially attributed to the Central Bank of Nigeria’s phased approach, initially granting access only to customers with bank accounts and restricting eNaira transactions to domestic usage only,” he added.
