After more than a year of operating its CBDC, the observation is the same: eNaira is not breaking through. It is rejected by a large majority of Nigerians. But that’s not the only problem. A new report from the International Monetary Fund (IMF) points to deeper problems.
Adoption of eNaira, limited by structural constraints
The launch of the Nigerian CBDC was one of the major financial events in 2021. While their project is ambitious, according to the authorities, its reception has been disappointing to say the least so far.
eNaira is on the whole shunned by the Nigerian population despite performances “commendable”. This is noted by the International Monetary Fund (IMF), a recent analysis of results from the Nigerian CBDC.
After more than a year of operation, the eNaira will only have been involved in around 802,000 transactions in all. This, for only 1.5% of active portfolios per week. While less than 1% of the country’s bank accounts have wallets.
Very poor performance for a digital currency which aimed at its launch to solve two major problems. This includes extending financial inclusion to people without bank accounts by facilitating the transfer of funds.
Areas for improvement, not so obvious to implement
At the moment, the CBDC of Nigeria is far from these goals which seem like wishful thinking. Because eNaira is beaten flat by mobile money services (MMO). The IMF also notes that a reversal of this trend will require a much more ingenious strategy.
“As with all network products with similar characteristics, such as credit cards, breaking the initial equilibrium of low adoption requires a mixture of shrewd strategies and luck”underlines in particular the report.
According to the international financial institution, there are ways to change the situation and improve the penetration rate of eNaira. The first would consist, for example, in setting up an intermediation system for fund transfers.
A second possibility would be to push merchants to use eNaira more. The Nigerian government’s initiatives in this direction have so far failed. The IMF also notes that turning the tide is “hard to imagine”. Hard to imagine, but not impossible.
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