The process of adopting the eNaira, a central bank digital currency (CBDC), has been very difficult in Nigeria. This is mostly because people don’t believe their government very much.
Chinedu Albert, a Nigerian lawyer who specializes in technology and innovation, brought this point of view to light when talking about the problems that need to be solved before eNaira can be widely used.
Albert said that the Central Bank of Nigeria’s (CBN) move in 2021 to stop regulated financial institutions from doing business with cryptocurrency exchanges has been a big reason why the eNaira hasn’t caught on with many people. People thought that the government was trying to stop people from becoming interested in cryptocurrencies, which were becoming very popular in Nigeria very quickly.
Nigeria’s high score on Chainalysis’ Global Crypto Adoption Index in 2021 showed that people there were becoming more interested in digital currencies, especially as a way to protect themselves from changes in government policy and inflation. Due to the fact that they are decentralized, cryptocurrencies give some protection against these economic factors that the eNaira does not.
![eNaira struggles as crypto ban haunts Nigeria's digital future image 118](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/12/image-118.png?resize=1024%2C726&ssl=1)
![eNaira struggles as crypto ban haunts Nigeria's digital future image 118](https://i0.wp.com/nosisnews.com/wp-content/uploads/2023/12/image-118.png?resize=1024%2C726&ssl=1)
The falling value of the Nigerian naira—23% of its value in the third quarter of 2023—has made people even more interested in cryptocurrencies. In 2022, KuCoin did a study that showed that many Nigerians were using digital assets to store and send money, looking for deflationary assets like Bitcoin to protect their value.
A big problem that is stopping the eNaira from being widely used is that people don’t trust it or the Central Bank of Nigeria (CBN). For the eNaira to work, the government needs to be able to rebuild trust and make the naira more reliable.
The eNaira was the first CBDC in Africa; it was released on October 25, 2021. However, it hasn’t been widely used. According to a report from the International Monetary Fund in May 2023, only 1.5% of all wallet transfers were made with eNaira each week, and a shocking 98.5% of eNaira wallets were not being used.
The public is skeptical of the central bank and its digital currency effort because of things it has done in the past, such as the initial ban on digital assets, the closing of crypto-linked bank accounts, alleged forex manipulations, and the recent redesign of the naira.
The CBN and the Nigerian government need to fix these trust problems if they want to stop this trend. It’s a good thing that banks and other financial institutions can now deal with digital assets again, which was done on December 23.
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