The eNaira is not a cryptocurrency, sadly. According to the Central Bank of Nigeria, it is a central bank digital currency (CBDC). It is backed by law and the full sovereignty of Nigeria. This currency was issued as the digital form of the Naira and is used just like cash.
The eNaira is a unit of account, store of value and medium of exchange. Launched in October 2021, Nigerians welcomed the digital currency like everything new and shiny in Nigeria. It gathered a lot of online buzz and downloads.
On the first day of its release, the eNaira app recorded over 7,300 downloads. Several personalities hailed the project as revolutionary. The President of the country also called it “a high-value and time-critical payment service to financial institutions and ultimately serves as the backbone for every electronic payment in Nigeria“.
With all the hype surrounding this project, it is astounding that 7 months after, no one is talking about it.
What Was the eNaira Supposed to Do?
Pegged at the exact value of the Naira, the digital currency was tasked with providing support to the existing physical currency.
It is also a driver of the government’s plan to transform the country into a cashless economy. The eNaira is said to usher digital development in the nation, expanding its tax base.
The CBN estimated a GDP increase of about $29billion from this project alone. It was championed as the major gateway to enjoying the full benefits of a global digital economy.
For rural traders, transactions can be made without extra bank charges, unlike in the past. Rural habitats can access their account and receive payments regardless of location, with zero third-party help.
A promised upgrade will also make borderless transactions possible. From any location, you can transact with people in other countries, with ease.
Challenges Of Adopting
For an initiative this great, one would think the rate of adoption would quadruple in its first two months. However, this wasn’t the case. Lower person-to-person transactions were recorded on the app. Its trust level began dwindling, and so did its numbers.
It is often marketed as a bridge between business people and customers in rural areas. However, a lot of issues undermine this. What issues? Well…
For starters, the app works predominantly with internet. When you consider that a large percentage of these rural dwellers lack internet, you will see the big problem. In addition, data cost remains a problem even among those above the poverty level.
To several others, the eNaira is just another cryptocurrency and so they treat it as such. Despite the government’s attempt to restrict the use of cryptocurrency, headstrong citizens do otherwise. They keep discovering alternate methods of trading and accessing them.
Even so, when you compare the eNaira to other limitless and explosive cryptocurrencies, it falls behind by a large sum. This has left most Nigerians uncertain of its use.
Also, the initial poor functionality of the app was a huge turnoff for many. Users complained of bugs interrupting the general experience, and a host of other software setbacks. However, these are fixable issues and with new updates scheduled to roll out soon, these flaws can be corrected.
What Is the Future of the eNaira?
The possibilities a digital currency holds for any economy are enormous.
Projections of GDP increase, economic stability and national initialization are huge benefits for these countries.
In Nigeria, assets like this can help fix the lack of proper financial interaction between rural and urban dwellers. Business people such as farmers and other producers can access their customers in real-time, from any location.
Like the mobile phone has afforded, payments also can be speedily processed, as long as internet exists.
The eNaira is also beneficial to those living outside the country. They can transfer money to recipients all over the world. These transfers are charge-free and still retain their value.
With the world’s goal of digitalizing finance, eNaira can play a massive role if managed appropriately. It can help place Nigeria at the fore of technology.
Nevertheless, mismanagement makes that future seem bleak. Actions that drive awareness and educate the general public needs to be the focus of the government.
The central bank plays a huge role in ensuring that eNaira is accessible and available. This will prevent the project from being labelled a failure and waste of resources.
Summarily,
The benefit of this scheme has never been in doubt. If regulated properly, it can catalyze growth in the banking sector and also the economy. Like other fintech products in the country, this is often the case.
Fintech is certainly a big deal in Africa, Nigeria precisely. Improving the traditional banking sector is often the key motive behind fintech startups. Here’s how these fintech startups are shaping the banking sector.
