The Central Bank of Nigeria believes its digital currency, eNaira, has triumphed in the ten months since its launch in October last year.
The app has been downloaded 840,000 times, nearly a third of which were converted to active wallets. 17,000 of these active wallets belong to merchants who ostensibly receive payments in the currency. The transaction volume and value of 200,000 naira and 4.4 billion naira ($10 million), respectively, are “very impressive,” central bank governor Godwin Emefiele said in a contest aimed at increasing the use cases of the currency.
However, this news should be viewed with a healthy dose of skepticism, as with an average of 1.35 transactions per active wallet, eNaira is not convincing its users to do much with it. At N22,000 ($52), the currency’s average transaction value lags well behind regular naira: Nigeria’s financial sector processes electronic payments at an average of N720,000 ($1,700) per transaction in 2021 (pdf)
The central bank’s announcement suggests it has made some progress in promoting eNaira as the app was removed from Google in its first week Temporarily removed from the app store. Nonetheless, public acceptance remains low as eNaira continues to compete for relevance with most Nigerians.
In theory, adding $29 billion to Nigeria’s GDP over the next 10 years is still a long and bumpy road, as President Muhammadu Buhari expects eNaira does.
eNaira is rolling out to the unbanked
Nigeria’s eNaira experiment may have been motivated by a need to stem the adoption of the country’s popular cryptocurrency, but the central bank sees it as an opportunity to bring more “underserved and unbanked” ” people into the financial services sector.
So far, eNaira has been in the first phase of its rollout for Nigerians with bank accounts. Emefiele said the next phase will focus on the unbanked who can sign up to use eNaira by dialing a USSD code. This will allow those without smartphones to still use the service.
It remains to be seen how sticky e-money will be, as Nigeria has so far held back the central bank The digital currency experiment provides guidance for other African countries considering similar digital currency initiatives.