Nigeria has been crippled due to its fiat currency shortage. An array of protests have been occurring, during which the public has been seen attacking ATMs and commercial banks. All of this was done after the outgoing President Muhammadu Buhari’s government decided to force citizens to employ the eNaira while limiting its fiat Naira. The eNaira is a central bank-issued digital currency [CBDC] that was rolled out in October 2021.
Nigeria was one of the very first countries to launch a CBDC. Considering the depleting economic conditions in the region, the government expected to see increased use of the eNaira. Sadly, things did not go as planned, as less than 0.5% of the country’s population used it. This data was curated after a year of its launch according to Bloomberg.
While several labeled this a failed project, the government began pushing it on its citizens. This did not go so well as old fiat currency was not accepted and no new Naira was being printed. This further caused the $220 billion informal economy of the nation to stagnate. It should be noted that cash is integral to this informal economy.
With the crisis growing dire, the Naira, which was already weak, lost much more ground to the dollar on the local black market for foreign exchange. A plethora of tweets from the citizens of Nigeria began surfacing.
When people were struggling to get their basic needs met, violence came into the picture.
A recent CNN analysis noted that 69% of Nigerians were looking to relocate if they had a chance to. Further, UK work visas issued to Nigeria increased by an astounding 400% in just a span of two years.
Could this be eNaira’s saving grace?
One of the major perils of the eNaira was that there were limited transaction options. Street vendors, who are part of the informal economy, were in grave trouble. The existing eNaira wallet requires a user to have a smartphone. However, a study shows that out of 219 million citizens, smartphone owners number between 25 and 40 million.
Taking this into consideration, the Central Bank of Nigeria [CBN] has been reaching out to tech firms across the globe to aid them in their eNaira redesign policy.
More recently, the CBN announced enhanced eNaira services in collaboration with ChamsMobile Ltd. and Super Agents. The unbanked can employ this without creating a bank account. This service allows users to transfer assets from one wallet to another by merely adding the recipient’s phone number. Furthermore, users can withdraw funds by sending the eNaira from their wallets to an ATM.
Additionally, CBN partnered with a New York-based tech firm called R3. Through this, the country hopes to rebuild the eNaira. This includes formulating a whole new system and managing the CBDC. While this brings some hope to the Nigerian market, the world speculates that angry Nigerians would refuse to use the technology.