Nigeria launches digital currency

Nigeria has launched a digital currency which the Central Bank of Nigeria says is a “major step forward in the evolution of money” in Africa’s most populous country.

President Muhammadu Buhari said at the launch that the digital currency and the blockchain technology it uses can foster economic growth and increase the GDP of Nigeria’s economy, one of Africa’s biggest, by 29 billion dollars (£21 billion) over the next 10 years.

The use of the Nigerian Central Bank Digital Currency “can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country”, Mr Buhari said, eight months after the West African nation began a crackdown on cryptocurrencies.

The eNaira – whose motto is “Same naira, more possibilities” – is an equivalent of Nigeria’s paper naira currency and is regulated as an official tender by Nigeria’s Central Bank.

Experts see the launch as a big step towards a cashless Nigerian society and speedy growth of the digital economy, which has been a priority of Nigeria’s apex bank since 2012.

“The eNaira is a major advancement for Nigeria,” said Andrew Nevin, chief economist at PricewaterhouseCoopers Nigeria.

“It is a much simpler payment mechanism and … is going to help in a lot of dimensions, including in reducing the amount of cash being used and the cost of transactions.”

The central bank said the launch of the digital currency is “one milestone on a long journey … eNaira enables households and businesses to make fast, efficient, and reliable payments, while benefiting from a resilient, innovative, inclusive, and competitive payment system”, the bank said in a policy document seen by the Associated Press.

It also hopes the digital currency will encourage financial inclusion in the country of more than 200 million people.

Only 45% of Nigeria’s 106 million adults had bank accounts as of 2020, according to the Lagos-based Enhancing Financial Innovation & Access, a financial sector development organisation.

Authorities are optimistic the eNaira will also drive digital transactions, which have seen rapid growth in Nigeria over the years.

As of 2020, the country recorded 2.7 billion transactions valued at 162.9 trillion naira (£288 billion), according to the central bank.

The initiative will also make it “much easier to transfer value”, especially for small-value transactions, Mr Nevin told the AP.

“Fintechs, banks and other financial players building on top of the eNaira will create more and more useful products and services and the positive economic impact is going to build up,” he said.