On October 25, 2021, Nigeria launched its central bank digital currency (CBDC) — the eNaira. Development began in 2017 with the identification of possible functions. The Central Bank of Nigeria (CBN) then partnered with Bitt, a fintech company based in Barbados, to develop eNaira. The main objectives for developing eNaira were to improve the availability and access to central bank money, support a resilient payments system, encourage financial inclusion, and reduce the cost of processing cash. Furthermore, eNaira aims to enable direct welfare disbursement to Nigerian citizens, increase the government’s revenue and tax collections, facilitate diaspora remittances, and reduce the cost of cross-border payments.
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The current version of eNaira focuses on person-to-person (P2P) and person-to-business (P2B) transactions through the Speed and the Merchant Wallets respectively. Central Bank Governor Godwin Emefiele announced in October that 500 million eNaira, an equivalent of $1.21 million, had already been minted and a total of 200 million eNaira had been issued to banks.
To set up a Speed Wallet, eNaira currently requires users to enter their phone number, email, and Bank Verification Number (BVN). This means that only those with bank accounts are currently able to use the eNaira. After an email verification, users are able to use the wallet in tandem with online banking apps. To load the wallet with eNaira, users log on to their personal banking app and transfer the desired amount to their wallet. Users are then able to send eNaira to anyone with an eNaira wallet by scanning the recipient’s QR code.
As a young global professional at the GeoEconomics Center, my research has focused on the evolution of central bank digital currencies. In November, I traveled to Nigeria, where I had the opportunity to see eNaira in action. In my experience, using eNaira’s Speed Wallet was fairly simple. Once I obtained the necessary information from my personal bank, I was easily able to register for the Speed Wallet, and did not experience any of the issues that were reported during the initial launch of the CBDC, such as technical bugs for new users trying to register.
The CBN announced in December of 2021, it has recorded 583,000 personal wallets and 83,000 Merchant Wallets with total transactions amounting to N188 million, or $500,000. The central bank could do more to increase the adoption of eNaira in a country with over 200 million people and an annual GDP of nearly $500 billion; particularly if President Mohammadu Buhari hopes to use eNaira to increase Nigeria’s GDP by $29 billion over the next 10 years.
The government should continue to work with private banks to encourage their customers to transition from a mobile payment transfer system to an eNaira wallet. In addition, the Speed Wallet needs to be further developed to facilitate diaspora remittances. The ability to send money directly from foreign to Nigerian bank accounts would encourage more Nigerians to use eNaira. The central bank should also focus on integrating the Speed Wallet and personal banking, so that users could load their Speed Wallet with eNaira without accessing their personal banking app. Having to switch between two apps is the most tedious part of using eNaira so fixing this would make the app more user friendly.
