The Central Bank of Nigeria (CBN) is working on plans to upgrade the country’s central bank digital currency (CBDC) so that it may be used on a wider range of items and services. In addition, it is continuing to impose onerous crypto regulations that stifle the country’s financial technology sector.
Central Bank of Nigeria (CBN) stance on cryptocurrencies in Nigeria
A recent report by the United Nations Conference on Trade and Development (UNCTAD) has found that Nigeria’s fintech sector is being stifled by the country’s restrictive cryptocurrency policies. The report recommends that the CBN should reconsider its position on digital currencies in order to allow the fintech industry to flourish.
The CBN has been one of the most vocal opponents of cryptocurrencies, going so far as to ban their use in Nigeria. However, the UNCTAD report is likely to add pressure on the central bank to reconsider its stance. It is worth noting that the CBN’s eNaira project has been plagued with problems and is yet to be fully operational. The (CBN) has pledged to incorporate bill payment into the upgraded version of its Central Bank Digital Currency, eNaira.
According to a report from Vanguard, CBN Branch Controller Bariboloka Koyor spoke at a campaign intended to “sensitize” firms to the eNaira in Lagos’ most populous city, Lagos, on 9th May. Starting next week, there will be an upgrade on the eNaira speed wallet app that will enable customers to make payments such as DSTV or utility bills, or even airline tickets across Nigeria, according to Koyor.
According to Koyor, the upgrade was made in order to make onboarding easier, with a wallet that had no fees and was faster than internet banking. The eNaira will be the only method to access government services in the future, with the benefits of early adoption.
This is a project that the CBN has rolled out to reach every Nigerian in terms of financial inclusion and in terms of efficiency, reliability, and safety of banking transactions so that we can do banking transactions very easily and safely and the people in Nigeria can enjoy the benefit of the eNaira.
CBN Branch Controller Bariboloka Koyor
Nigeria’s eNaira adoption
The eNaira was designed to increase financial inclusion in Nigeria and has been praised by the Nigerian government for its potential to do so. The project has also gained traction with the local population, with around 500000 downloads on its launch, according to reports. The value of the naira has plummeted by more than 209 percent in the last six years, prompting Nigerians to embrace crypto in record numbers. According to an April study from the KuCoin cryptocurrency exchange, around 33.4 million Nigerians owned or traded cryptocurrencies during the previous half-year.
However, the eNaira has been beset by problems, with many users reporting that they are unable to use the currency. In addition, the CBN has been slow to roll out the project, with only a small number of people being able to use the eNaira so far.
After the eNaira was released in October 2021, crypto trading restrictions were increased. The Crypto adoption rate in Nigeria has continued to rise astronomically despite the government’s ban on cryptocurrencies. The action has resulted in commercial banks in the country monitoring their customers’ accounts for signs of bitcoin trading, putting fintech firms’ bank accounts at risk. The banking authority in Nigeria has lately addressed the eNaira, a fixed currency launched in October. According to the CBN, eNaira is more trustworthy than decentralized currencies like Bitcoin.
It is clear that the CBN’s eNaira project has not been as successful as hoped and that its restrictive policies on cryptocurrencies are stifling the country’s fintech sector. In light of this, it is imperative that the CBN reconsider its position on digital currencies. Only then will the Nigerian fintech sector be able to flourish.