Is Nigeria’s E-Currency Plan a Failure?

For over a year, Nigeria has attempted to make add electronic currency known as the eNaria a viable method of payment for its citizens. This is a central bank digital currency, or CBDC come which was supposed to allow Nigerian citizens to bank more easily. A year after the launch, financial analysts are calling it a miserable failure.

An Attempt at Digital Banking for Africa

This digital currency was meant to make digital banking easier for Nigerians, but the adoption rate has been incredibly poor, even after the eNaria has been available for so long. The Nigerian government has expressed its disappointment with the CBDC’s reception.

Government backed digital assets like CBDC’s have been a popular alternative to more volatile cryptocurrencies list in 2022, when the crypto market has been going through serious stability issues like the May crash.

Nigeria is at the forefront of official government digital financial options, and it was one of the first countries to create currency of this type. The hope for the currency was that it would be adopted widely throughout Africa, connecting the continent in a way that physical infrastructure and physical monetary units could not.

The adoption rate for the eNaria is depressingly low, with just 0.5% of Nigerians using the CBDC. It could be considered an abysmal failure at this point, particularly since Nigerians have readily adopted cryptocurrency. About 35% of Nigerian citizens (among those aged between 18-60) used cryptocurrency in 2022.

So, Why Isn’t eNaria Thriving?

The official digital currency of the Nigerian government maybe floundering because the country’s citizens are confused about how legal it is. When questioned, many of the citizens said they were not sure if the government is really backing a digital currency, since it has spoken out against cryptocurrency very recently. They may not understand that the CBDC eNaria is meant to be much more stable compared to the historically volatile cryptocurrency.

Many citizens are asking why the government is asking them to put their faith in a digital currency at all. The Nigerian government as well as its central bank have had difficulties in educating Nigerians about the difference between cryptocurrencies and CBDC. Because much of this technology is very new, it is difficult for many Nigerians to understand its functionality and accept it as something different from cryptocurrency.

The situation with eNaria in Nigeria is being closely monitored by financial institutions and governments around the world. They are interested in how this digital financial experiment is going to play out, helping inform their decision to move forward with something similar or not. Over 100 countries are currently considering setting up the CBDC, and what happens with the Nigerian eNaria will be crucial in determining whether some of those projects move forward.