- The Central bank of Nigeria has upgraded their native digital currency, the eNaira, to keep the public away from using crypto alternatives. It seems that Nigeria is eager to push eNaira as much as possible, while at the same time implementing harsh restrictions on cryptocurrencies. The legislative direction has already been monitored by the UN, which reported that the harsh restrictions are suppressing the African nation’s fintech sector. The head of the Central Bank has received a notable amount of critique from not only international institutions, but local politicians as well.
We need a New @cenbank Governor. I will consult for free to make sense of the #eNaira in less than 6months under a sane administration.— SEGA L'éveilleur® (@segalink) May 10, 2022
Rather than telling you how to strengthen the Naira, we can demonstrate it and experience the change. #AnotherContribution #StableCoin 💰 pic.twitter.com/bzo1SEEVbK
The Central bank’s spokesperson, Bariboloka Koyor, emphasized the importance of early adoption. According to Koyor, once the e-Naira takes off in the country, it will be the only way to receive financial aid from the local government. In addition to this, research carried out last month revealed the e-Naira to be ranked as the most developed CBDC in the world, beating out those of China, South Korea and Bahamas.
Nigeria’s e-Naira has been ranked as the most developed Central Bank Digital Currency (CBDC) in the world after beating out Bahamas, China, South Korea and other countries to lead the top 10 rank.— Taiwo_Ajakaye (@dmightyangel) April 11, 2022
So, don't be bitter about E-Naira o! pic.twitter.com/Y0GnveL9Az
Competition Between CBDCs and Crypto Is Heating up
Last year, the Nigerian government ran a pursuasive promotional campaign for the eNaira, led by the tagline “Same Nara, more possibilities.” However, the naira itself has plummeted by 209% in the last six years. Faced with this reality, a huge number of Nigerians took interest in crypto. Just last month, one popular Nigerian crypto exchange revealed that over 33 million Nigerian citizens held or traded cryptocurrencies in the second half of 2021
Ever since the eNaira’s launch in October last year, the rules on crypto trading have been tightened. Commercial banks are now required to track their clients activity and report to the government if any sign of crypto trading is picked up. This has already caused significant damage to the IT sector, especially fintech, as explained in a report by the Secretary Generals of the Organisation for Economic Co-operation and Development and the United Nations.
Expressing concern for young adults working in the technology sector, the report stated: “The restrictions on cryptocurrency transactions in Nigeria have crippled foreign direct investment in the fintech industry”.
To summarize, the CBDC doesn’t seem to be showing any signs of slowing down. Recently, it was reported that a whopping 80% of central banks are working on their own digital currencies. China was the first country to put the ambition to practice and now offers its digital yuan app to citizens from 23 cities, with plans to expand further.