Nigeria is suffering from a serious shortage of physical cash as the country’s central bank has replaced older banknotes with larger denominations due to rising inflation. As a result, the adoption of the country’s central bank digital currency (CBDC), eNaira, has skyrocketed.
While developing countries were among the first to recognize the importance of a CBDC in overhauling fiat capabilities, Nigeria is one of the few countries where the idea has been realized due to a lack of physical cash. In a country where cash accounts for about 90% of transactions, the value of eNaira transactions increased 63% to $47.7 million (22 billion eNaira), according to a Bloomberg report.
Godwin Emefiele, the governor of the Central Bank of Nigeria, said the total number of CBDC wallets increased more than 12-fold from October 2022 and currently stands at 13 million wallets. Demonetization reduced circulating cash from 3.2 trillion eNaira to 1 trillion eNaira, but Nigeria minted over 10 billion eNaira in CBDC to offset this decline. In addition, eNaira disbursements in government initiatives and social programs are also contributing to the increase in CBDC adoption.
For developing countries, CBDCs are a way to address the challenges of the fiat economy, including reducing operating costs and strengthening anti-money laundering (AML) initiatives. According to Emefiele, Nigeria’s eNaira has become the preferred electronic payment channel for financial inclusion and social intervention delivery.
Read more about the adoption of eNaira in Nigeria and find the most important economic news from around the world with the Born2Invest mobile app.
Amid the money crisis, Nigerians were also presented with another option for acquiring cryptocurrencies
ConsenSys, the parent company of MetaMask, recently announced a new MoonPay integration that allows Nigerians to purchase crypto via bank transfer. This new feature is available in MetaMask Mobile and Portfolio DApp and greatly simplifies the process of buying crypto without using credit or debit cards in Nigeria.
Overall, the introduction of eNaira in Nigeria is a significant step towards modernizing the country’s financial system and promoting financial inclusion. With the rise of CBDCs, other developing countries may follow Nigeria’s lead and adopt their own digital currencies to address the challenges facing their fiat economies.
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First published in COIN KURIER, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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