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Nigeria’s CBDC, the e-Naira, whose launch gulped millions of Naira from the nation’s coffer may likely hit rock bottom in its second year.&nbsp;



The e-Naira, Africa’s first CBDC, was launched in October 2021 by Nigeria’s apex bank, the Central Bank of Nigeria (CBN), to digitize it, but its extremely low adoption rate underpins the thesis that cash is king in Africa’s most populous nation.



The massive rejection of the e-Naira by the country’s citizens and merchants is reminiscent of the failure of the 2012 cashless policy that was aggressively pursued by the erstwhile Governor of the CBN, Sanusi Lamido Sanusi. It is a catastrophic repeat of history and its hard lesson.



Despite the millions of Naira that it cost to deploy, the e-Naira is going south because it is ill-timed. In other words, its imminent failure is largely due to the sheer disregard for the sentiment of the people for whom it was designed.



The ill-timing of the e-Naira does not only make it unresponsive to the CBN’s financial innovation strategies, but it also spells doom for its effort to strengthen the Naira through blockchain technology.



As of today, e-Naira&#8217;s adoption rate stands at a meager two percent, with only a fraction of users on banking app platforms nationwide. The rapid rise and subsequent decline in its popularity cannot be solely attributed to the country’s financial literacy problem.&nbsp;



Rather, it signifies the Central Bank of Nigeria&#8217;s failure to gauge the e-Naira&#8217;s appeals as a public policy tool through an effective interface with the people.



Although Nigeria’s burgeoning informal economy holds 85% of the cash in circulation, its sentiment is far a greater consideration than the weight of the CBN’s monetary policy. As a matter of fact, its sentiment caused the ensuing apathy among the population who has mostly rejected the e-Naira for its lack of clarity and direction.&nbsp;



For most people living in the country, a digital Naira, although part of the sum, is far ahead of its time, and has no chance to fully digitize the country’s economy.



<h2 class="wp-block-heading" id="h-the-e-naira-and-the-imf-factor">The e-Naira and the IMF Factor</h2>



CBN under Governor Emefiele was the first to catch the CBDC fever, and with the IMF’s technical support, Nigeria became the first country in Africa to launch its own digital currency at a time when it was thought to be a developed nation matter.



Furthermore, it is clear that the IMF played a direct role in the design of Nigeria’s CBDC, but there is certainly the IMF anti-crypto policy at play. This IMF factor has consistently played out in the way the IMF Board has criticized the sudden rise of cryptocurrencies, and in its strong stance that they should never be a legal tender.



The IMF factor was also enough for Nigeria’s CBN to go from banning cryptocurrencies in February 2021 to launching its own CBDC in October 2021, as a way to proactively halt the intrusion of cryptocurrencies and the foretold consequences the IMF warned everyone about.&nbsp;



One year on, it is faced with the imminent failure of a highly publicized policy that its own people never asked for. In addition to that, it has lately become a classical example of how a country can commit economic blunders when no one is watching.



Even though Nigeria’s launch of its CBDC, the e-Naira, brought it enormous attention in the comity of nations, the country’s sudden transition to a digital version of its currency remains questionable.



CBDCs have slowly crept into the economic agenda of the world due to the role of the IMF and its anti-crypto stance.&nbsp;Prepared and ambitious, Nigeria took the early lead in its adoption in Africa, but 2023 has not been a great year for it.&nbsp;



Today, it has remained an uphill task to transition to a CBDC-based economy as the imminent failure of the e-Naira takes center stage. The message this holds for Nigerian policymakers is that, according to the collective wisdom of the people, cash still wins, regardless of the influence of the e-Naira.
The post <a rel="nofollow" href="https://www.unlock-bc.com/103176/the-e-nairas-struggle-nigerias-cbdc-faces-major-setback-in-its-second-year/">The E-Naira&#8217;s Struggle: Nigeria&#8217;s CBDC Faces Major Setback in Its Second Year</a> appeared first on <a rel="nofollow" href="https://www.unlock-bc.com">UNLOCK Blockchain</a>.

The E-Naira’s Struggle: Nigeria’s CBDC Faces Major Setback in Its Second Year

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Andre artikler udgivet 8. jun. 2023

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