Nigeria’s eNaira central bank digital currency (CBDC) is over a year old, and the International Monetary Fund (IMF) has a late birthday present for it in the form of a working paper assessing its first year of performance. “Laudable,” said IMF researchers regarding the eNaira’s debut year, but there were a few suggestions too.
The eNaira was the world’s second CBDC, premiering in October 2021, after the Bahamian Sand Dollar. The paper found the eNaira’s retail side was intermediated, but had no problems with latency, as it has yet to make its breakthrough beyond its initial adopters. The Central Bank of Nigeria introduced a phased introduction, which put off two of the CBDC’s biggest goals, extending financial inclusion to the unbanked and facilitating remittances, according to IMF officials.
Related: eNaira is ‘crippled‘: Nigeria in talks with NY-based company for revamp
Only about 1.5% of wallets are active on any week, and there were only a total of 802,000 transactions during the timespan examined. The figures represent less than one per wallet, and less than 1% of bank accounts in the country have wallets. The paper observed:
“Like any network products with similar traits (e.g., credit card), breaking the initial low adoption equilibrium requires mix of clever strategies and luck.”
Mobile money operators (MMOs) have a vast network in Nigeria, and the eNaira’s relationship to that network is a key question raised in the paper. The CBDC could compete with the MMOs on the retail market or facilitate MMOs’ operations by providing a bridge between them. The paper called the eNaira’s replacement of all the MMOs’ services “hard to imagine,” but also noted that a bridge function could set off a difficult “industry reshuffle.”
CoinW Africa Today#Nigeria was the second country after Bahamas to roll out a CBDC. Following Nigeria’s October intro
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Author: Derek Andersen
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