Commercio Partners Make Case for Renewed Adoption of CBN's e-Naira in Nigeria
- A new report by Commercio Partners has acknowledged the possible benefits of Nigeria's central bank digital currency (CBDC), the e-Naira.
- While highlighting some of the challenges that the e-Naira has had to face, the report underscores the positive impact it can play
- The report, therefore, advises the CBN to re-strategise with features that will make the digital currency more appealing to Nigerians
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
Nigeria's central bank digital currency (CBDC), the e-Naira, has the potential to achieve mainstream adoption, according to Commercio Partners, a research and investment firm.
Dr Ifeanyi Ubah, an investment research associate at the firm, stated this while presenting the Comercio Partners 2024 Macroeconomic and Markets Outlook report titled "Finding Rain in Drought."
The firm's inaugural report meticulously analysed the global and local economic landscape of 2023, followed by detailed sector-specific forecasts for 2024, with a special focus on Nigeria.
Source: UGC
Low adoption, despite being first in Africa
A central bank digital currency represents virtual money, essentially mirroring physical currency but issued electronically by a country's central bank.
Nigeria made history as the inaugural African nation to introduce such a currency, famously dubbed the e-Naira.
Introduced in October 2021, the e-Naira was envisioned to transform transactions, bolster financial inclusion efforts, and position Nigeria as a leader in digital financial innovations.
Nevertheless, two years after its inception, the e-Naira confronts a series of intricate challenges, notably regarding its adoption rate.
Challenges faced by e-Naira
Despite the ambitious master plan and substantial investments by the Central Bank of Nigeria (CBN), the e-Naira has faced opposition from the demographic it sought to empower.
The minimal adoption rates, where merely 1.5% of wallets are actively utilised, underscore a gap between the digital currency and the everyday experiences of Nigerians.
The report stated:
One of the primary impediments thwarting eNaira adoption is the ambiguity surrounding its use cases. Despite the Central Bank of Nigeria's (CBN) vision for the e-Naira to serve as a catalyst for financial inclusion, reduce informality, and tap into remittance markets, many Nigerians find themselves unable to identify compelling reasons to embrace this new form of digital money.
Additionally, the report highlighted that the e-Naira's lack of a distinct identity has made it susceptible to scepticism.
Potential users are uncertain about how it integrates into their current financial framework, contributing to apprehension surrounding its adoption.
Future of the e-Naira
The recent transition in leadership at the CBN, with Olayemi Cardoso assuming the top position, introduces further uncertainty about the future of the e-Naira.
Cardoso's divergence from significant development finance endeavours initiated by the former governor, Godwin Emefiele, including the e-Naira project, hints at a reevaluation of priorities.
Amidst these uncertainties, the trajectory of the e-Naira relies heavily on strategic adaptations and transparent communication.
Recently, Legit.ng reported that the CBN, in its quarterly statistical bulletin, disclosed that the value of the e-Naira in circulation increased sharply by 302% in just nine months, from N2.55 billion at the end of 2022 to N10.26 billion at the end of September 30, 2023.
Hopes for e-Naira
Dr. Ubah remarked on the sidelines that during Godwin Emefiele's tenure, the CBN overlooked the implementation of effective strategies for introducing the e-Naira.
However, there's optimism that under the leadership of Yemi Cardoso, the new CBN can rectify these shortcomings and enhance the acceptance of e-Naira.
He said:
Undoubtedly, the CBDC stands as a remarkable innovation benefiting economies worldwide. Nigeria's pioneering adoption of the e-Naira within Africa represents a significant milestone.
The potential impact of the e-Naira on the lives of Nigerians is substantial, contingent upon its widespread acceptance. The transformative capacity of the e-Naira in revolutionizing payment methods hinges on universal accessibility and willingness to adopt.
To foster greater interest and adoption among Nigerians, the CBN must prioritize creating an appealing payment system, providing opportunities for interest accrual, and minimizing transaction costs.
Furthermore, a revitalised focus on developing use cases that align with the diverse requirements of Nigerians has the potential to redefine perceptions surrounding the e-Naira.
The report added:
The journey to eNaira's mainstream adoption is undoubtedly challenging, but the potential rewards for financial inclusion, reduced informality, and tapping into remittance markets are too significant to ignore.
On a final outlook, Commercio Partners holds the view that the e-Naira's triumph will be determined by its capacity to surmount challenges, instil trust, and flexibly navigate the shifting financial terrain.
Nigeria's e-Naira upgraded with new feature
In related news, Legit.ng earlier reported that the CBN has enabled new features that allow users to operate without smartphones.
The e-Naira now includes a Near Field Communication (NFC) feature, a chip-enabled device that allows its use without smartphones or internet access.
The CBN also hinted at plans to make the e-Naira the preferred means of revenue collection in tertiary institutions across the country.
According to Joseph Angaye, a Deputy Director at the bank, this will help reduce leakages in revenue collection and ensure a seamless process regarding accounting function reconciliation.
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Source: Legit.ng
