Nigeria Launches Africa’s First Digital Currency
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Nigeria Launches Africa’s First Digital Currency

2 years ago

The eNaira may help Nigeria repair its badly damaged remittance system.

Nigeria Launches Africa’s First Digital Currency

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Africa’s largest country has launched the continent’s first central bank digital currency.

The Central Bank of Nigeria announced that the eNaira went live on October 25, making the country of nearly 220 million home to what is far and away the largest CBDC.

After sandboxed testing dating back to 2017, the CBN concluded “that a digital currency would drive a more cashless, inclusive, and digital economy,” said Nigerian President Muhammadu Buhari at the launch ceremony
The eNaira was developed by Bitt, using the Barbados-headquartered firm’s Digital Currency Management System, a production-ready digital currency infrastructure based on Hyperledger Fabric.
The bank’s eNaira digital wallet has a number of features, including easier movement of their money, contactless payment, peer-to-peer payments, and simple verification of payments. 

Users will be able to “send and receive money faster, easily, and at very minimal costs,” the CBN said. The same applies to financial institutions, which will be able to make inter and intra-bank transactions faster and cheaper.

But the key benefit is likely to be enabling faster and easier cross-border money transfers, notably remittances. Foreign exchange problems are causing serious disruptions to remittance income, Nigeria’s second-largest source of foriegn currency after oil. Notably, the central bank promised that the eNaira will offer “a hitch-free foreign exchange.”

Local reports have suggested that an increasing number of Nigerians are turning to Bitcoin as official remittance numbers plummeted over the past year. 
Nigerian remittances dropped off significantly in the second quarter of 2020, falling to $3.37 billion from $5.63 billion in Q1 2020 due both to the pandemic and what Bloomberg called the central bank’s “multiple exchange rates and a raft of regulations,” as it tried to shore up the naira from continuing devaluations. Overall, remittances dropped more than a quarter in 2020 according to the World Bank. 

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What’s Next

So far only two CBDCs have launched: the Bahamas’ Sand Dollar and the Eastern Caribbean Currency Union’s DCash, in full use by five of its eight members: Antigua and Barbuda, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. Dominica and the U.K. territories of Anguilla and Montserrat. That doesn't include Venezuela’s abortive Petro.
But some 80 countries are researching, developing or launching some form of CBDC. 
However, China’s forthcoming digital yuan renminbi will dwarf the eNaira.
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