ENaira’s Transactions in Nigeria up 63%, Records $44 Mln

The value of transactions of eNaira, the Nigerian central bank digital currency (CBDC), has spiked 63% to record $44 million (22 billion nairas), Cointelegraph quoted a Bloomberg report as saying.

This increasing adoption of CBDC in Nigeria comes due to a shortage in fiat currency because the Nigerian central decided to replace older bank notes with bigger denominations because of rising inflation, therefore the lack of the banknotes forced the Nigerians to head for eNaira.

According to Godwin Emefiele, the Central Bank of Nigeria’s governor, nearly 13 million CBDC e-wallets have been opened an increase of 12 times compared to October in a country whose 90% of its transactions are being made through cash accounts.

What made the CBDC adaption in Nigeria increase is eNaira payouts in government initiatives and social schemes in addition to the government’s move to pay poor Nigerians money under a welfare program.

“The eNaira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions,” Emefiele noted, adding: “Of the more than 10 billion naira of the digital currency minted so far, about 3.4 billion naira is already in circulation.”

Earlier in October 2021, Nigerian President Muhammadu Buhari officially introduced the country’s digital currency after the Nigerian Federal High Court approved the rollout of a CBDC as a legal tender on October 2 of the same year.

CBDC’s total value of payments is expected to grow 260,000% in the coming decade to record $213 billion annually by 2030, compared to $100 million in 2023, a new study revealed.

According to Juniper Research, the radical change will occur because of the increasing world governments’ adaption of the CBDCs to bolster financial inclusion and tighten control over how digital payments are made.

CBDC is a digital coin issued by a central bank and pegged to the country’s fiat currency. It is not a cryptocurrency, whose value is determined by market supply and demand.

The research found that domestic payments would account for more than 90% of the total value transacted via CBDCs. Because they are issued by central banks, CBDCs will be targeted by domestic payments. The report suggested that the cross-border payments will happen later following stronger links and ties among entities in terms of CBDCs in the individual country.