Renowned Nigerian legal expert in technology and innovation, Chinedu Albert, has pointed out that the adoption of eNaira, the Central Bank of Nigeria’s digital currency, hinges on the government’s ability to regain the trust of its citizens and elevate the standing of the national currency, the naira.
Albert contends that the Central Bank’s 2021 ban on regulated financial institutions serving crypto exchanges significantly impeded the acceptance of eNaira. He views the digital currency as a response to the government’s “ill-advised” blanket ban on cryptocurrencies and other digital assets.
Despite Nigeria receiving a high ranking in Chainalysis’ 2021 Global Crypto Adoption Index, indicative of a demand for a currency unaffected by government policies and inflation, Albert argues that eNaira’s adoption remains low due to its lack of the protective features characteristic of cryptocurrencies.
A 2022 study by crypto exchange KuCoin revealed that many Nigerians have turned to cryptocurrencies as a viable alternative for storing and transferring assets, especially in light of the Nigerian naira losing 23% of its value in the third quarter of 2023. Albert emphasizes that the eNaira must offer a similar safeguard against currency depreciation to attract local investors who have lost faith in the national currency and its controlling authority.
Launched on October 25, 2021, as Africa’s first Central Bank Digital Currency (CBDC), the eNaira has struggled to gain widespread adoption. An International Monetary Fund report from May 2023 disclosed that only 1.5% of total wallets were involved in approximately 14,000 eNaira transactions weekly, highlighting a dishearteningly low adoption rate.
Despite the Central Bank lifting the ban on digital assets for Nigerian banks and financial institutions on December 23, a lingering trust deficit remains for the CBN and its eNaira. Negative perceptions stem from past actions such as the crypto ban, closure of crypto-linked bank accounts, forex manipulations, and a recent redesign of the naira. Albert asserts that overcoming this trust deficit is crucial for the successful adoption of the eNaira.
