Vigor for Cryptocurrencies in Nigeria Deters Adoption of the eNaira 

Despite the Central Bank of Nigeria putting in efforts to spur interest and adoption rates of the eNaira, citizens still show a cold reception.

Africa’s first digital currency, the eNaira, from Nigeria is yet to receive a warm reception as expected.

Reportedly only 0.5% of the total 217 million population in Nigeria are using the digital currency. This comes a year later after it was launched on 25th October 2021.

According to Chainalysis, Nigeria ranked as the top country in Africa to register high levels of crypto adoption rate and the 11th globally. A report from KuCoin also revealed that 35% of the population aged between 18 to 60 years owned a cryptocurrency or had traded using crypto in the year 2022.

Coming from the fact that the Central Bank of Nigeria restricted financial institutions from executing crypto services, some Nigerians are skeptical.

The CBN provided these restrictions in February 2021 severing the fiat currency on and off ramps. However, these efforts  proved futile as the Naira  plunged in value around six times since 2015. The Naira is still expected to further decline by 20% next year.

Providing the CBDC education to Citizens who are already wary of the government’s lack of clarity and ruling on cryptocurrencies comes as a challenge to the apex bank. Such factors could make it difficult for the CBDC to sell to the netizens.

According to Adesoji Solanke, director at Renaissance Capital “The eNaira does not address any of the basic use cases so no surprise at its lowered option rates so far.”

CBN’s effort to spur interest in the eNaira

The Central Bank of Nigeria conducted a grassroots campaign in an effort to spur the adoption of the eNaira.The bank hired some commercial drivers from the Federal Capital Territory to educate them on how to use the eNaira. The drivers then acted as ambassadors to spearhead campaigns on the eNaira’s adoption.

The apex bank aimed at building not less than 10 agent sites in all the 774 local government areas in the country.

The commercial drivers were informed on the idea, aim, benefits and use cases of the digital currency. This came during the campaign organized for motorized rickshaws.

The tricycle drivers and the passengers would get a 5% discount after they completed financial transactions through the eNaira.

Dr. Aminu Bizi, CEO of Bizi Mobile Cashless noted that “getting to the grassroots is the key to this. The eNaira is ready to use if the vendor of sachet water, the shoe shiner, and other small-time traders adopt it.”

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Lack of trust, the major deterrent

Analysts have weighed in and established that the lack of trust from citizens contributes to the cold reception towards the eNaira.

Currently, Nigeria stands as the leading state of Fintech startups in Africa. A significant number of fintech startups that offer some of the goals and objectives of the eNaira already exist.

Citizens are more receptive to the startups as they do not come with monitoring and access to their financial transactions. A con of the eNaira which greatly discourages people from using it.

Adebayo Adebuwagun, an analyst at Songhai  Advisory noted, “the challenge is that all these are already adequately addressed by other financial platforms. Nigeria is the leading state of Fintech startups in Africa so there are so many options for people to pay fast.”

Northern Nigeria shows high reception rates

Apparently, the Naira registered a  43% interest rate from October 24th to October 30th, 2021. After the launch, the interest began to decline drastically. However, Bitcoin and other cryptocurrencies maintained stability over this time. The interest rate of cryptocurrencies was 41%. 

From March 20th to March 26th, 2022 interest in the eNaira was below 1 index point.

Kano, Yobe, Zamfara, Adamawa, and Jigawa are presently the most enthusiastic in the eNaira currency. While bitcoin interest was highest in Ebonyi, Anambra, Enugu Kano, and Akwa Ibom.

From the Atlantic Council CBDC tracker Nigeria ranks as one of the 11 countries to have fully developed and launched a central bank digital currency.