The Central Bank of Nigeria has joined a growing list of emerging markets betting on digital money to cut transaction costs and boost participation in the formal financial system.
“Nigeria has become the first country in Africa, and one of the first in the world, to introduce a digital currency to her citizens,” President Muhammadu Buhari said in a televised speech at the launch in Abuja, the capital.
“The adoption of the central bank digital currency and its underlying technology, called blockchain, can increase Nigeria’s GDP by $29bn [about R435bn] over the next 10 years.”
The International Monetary Fund projects GDP for Africa’s largest economy to be $480bn in 2021.
The adoption of the central bank digital currency and its underlying technology ... can increase Nigeria’s GDP by $29bn over the next 10 years
— President Muhammadu Buhari
The issuance of the digital currency, called the eNaira, comes after the central bank earlier in February outlawed banks and financial institutions from transacting or operating in cryptocurrencies as they posed a threat to the financial system.
Since the launch of the eNaira platform, it’s received more than 2.5-million daily visits, with 33 banks integrated on the platform and more than 2,000 customers onboarded, central bank governor Godwin Emefiele said at the launch.
Central bank digital currencies, or CBDCs, are national currency — unlike their crypto counterparts, such as bitcoin and ethereum, which are prized, in part, because they are not tied to fiat currency.
“The eNaira and the physical naira will have the same value and will always exchange at one naira to one eNaira,” said Emefiele.
The digital currency is expected to boost cross-border trade and financial inclusion, make transactions more efficient and improve monetary policy, according to the central bank.
“Alongside digital innovations, CBDCs can foster economic growth through better economic activities, increase remittances, improve financial inclusion and make monetary policy more effective,” said Buhari.
Nigeria joins the Bahamas and the Eastern Caribbean Central Bank in being among the first jurisdictions in the world to roll out national digital currencies. China launched a pilot version of its “digital renminbi” earlier this year.
