Nigeria launches eNaira, a digital version of its currency

With crypto assets, Nigerians are looking to escape the continued depreciation of the naira in recent years. (Photo: 123RF)

ABUJA – Nigeria on Monday became the first sub-Saharan African country to launch a digital version of its currency, eNaira, in a bid to position itself against the growing popularity of crypto assets.

With this launch, Nigeria, Africa’s leading economy in terms of GDP and the most populous country on the continent (over 200 million people), is a leader in the continent, along with Ghana which since September has been testing eCedi as a new mediator. Exchange.

“We have become the first country in Africa and one of the first in the world to introduce digital currency to our citizens,” Nigerian President Muhammadu Buhari said at a press conference in Abuja.

“Recently, the use of cash for doing business and making payments has decreased,” he explained. It is a trend, according to him, that has “exacerbated since the beginning of the epidemic and the birth of a new digital economy.”

He added that eNaira aims to facilitate online exchanges, but should also “bring more and more people and businesses into the formal sector and thus increase tax revenue in the country.”

In recent years, central banks around the world have been exploring ways to create digital versions of their currencies in the face of the growth in web-based payments, but also with an interest in cryptocurrency pools, which is out of reach of state control or global regulators.

Nevertheless, crypto assets are very popular in Nigeria, where it was ranked in 2020 as the third user of virtual “currencies” in the world after the United States and Russia, by a study conducted by the specialized research firm Statista.

Economic crisis

With crypto assets, Nigerians are looking to escape the continued depreciation of the naira in recent years. It also makes it easier for them to receive money from the diaspora or take their savings out of the country.

Unlike crypto assets, eNaira is actually the digital equivalent of Nigeria’s physical currency, naira. It is issued by the central bank and thus follows the official exchange rate.

Nigerians can download the eNaira app and fund their mobile wallets using their existing bank accounts.

The Central Bank of Nigeria says it will adapt the system after its launch to encourage its use by people who do not have access to banking services, especially in rural areas.

The launch of eNaira comes at a time when Nigeria, Africa’s largest oil producer, must grapple with the economic consequences of the Covid-19 pandemic and the drop in global crude oil prices in recent years.

Having experienced a second recession in five years after the pandemic began, Nigeria’s economy has returned to growth. But inflation, especially the cost of food, is still very high and the naira is low against the dollar.

Last year, China became the first major economy to launch a test version of a digital currency. Since then, at least five countries have launched their virtual currencies and 14 others, including Sweden and South Korea, are in the beta phase, according to the American think tank Atlantic Council.

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