The eNaira, recorded a 63% increase in transaction value due to the country’s demonetization policy and cash shortage crisis, with an estimated 22 billion naira worth of transactions having been made.
Nigeria’s eNaira, the central bank digital currency (CBDC), is seeing increased adoption. As a result of the country’s demonetization policy, many citizens are looking for alternative payment channels.
Godwin Emefiele, Governor of the Central Bank of Nigeria, reported that since the introduction of the eNaira, the value of its transactions has risen by 63%. An estimated 22 billion naira ($47.7 million).
Godwin also noted that the number of wallets had increased over 12 times to 13 million when compared with data from October 2022.
Cash shortage crisis
In late 2022, the Central Bank of Nigeria began replacing old 200-, 500-, and 1,000-naira notes with new ones. Striving to mop up excess cash, curb inflation, and address rising insecurity. Since this action, the west African nation has experienced an acute cash shortage crisis. The currency has recorded a drop in circulation from 3.2 trillion nairas in September to about a trillion naira.
Cash accounts for approximately 90% of transactions in Nigeria’s informal economy, making the shortage particularly challenging for citizens.
eNaira emerges as payment channel of choice
CBDCs present a solution for developing countries looking to revamp their fiat capabilities. Nigeria’s government initiatives boosted the adoption of the eNaira through actions such as paying social schemes to the poor. The scheme added four million new wallets to the total number, according to Emefiele.
The CBDC has also become the electronic payment channel of choice for financial inclusion and executing social interventions.
Related; Lagos Top Africa Crypto Hub: 45% of Population Own Crypto
Cryptocurrency procurement made easier
The adoption of eNaira has been low since its launch in October 2021. The Central Bank of Nigeria struggled to convince its citizens to use the eNaira.
Reportedly, only 0.5% of Nigeria’s total 217 million population used the digital currency as of October 2022.
In early December last year, the central bank instructed financial institutions to limit withdrawals. Individuals and businesses were limited to withdrawing $225 per week from ATMs. Nigerians then embraced Bitcoin, and as of 31 January, Nigeria’s BTC recorded a 60% surge.
As the country experiences a cash crunch, Nigerians have been presented with another option for procuring cryptocurrencies. ConsenSys, the parent company of MetaMask, has announced a new MoonPay integration that allows Nigerians to purchase crypto via bank transfers. The new feature is available within the MetaMask mobile and Portfolio DApp, providing a simple way to buy crypto without using credit or debit cards in Nigeria.
