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- Why analysts termed the eNaira a massive failure?
The discussion on CBDCs has been in the limelight for the last few months, and around 18-19 countries have launched their CBDCs, and 100-plus nations are working on developing CBDCs.
Central Bank Digital Currencies(CBDCs) are digital tokens identical to cryptocurrencies, but Central Bank issues them, and traditional currencies of that country peg their value.
After the discovery of Blockchain technology, the fintech sector became advanced, and in the last 5-6 years, the technology has been spreading its feet globally.
After the crypto market collapses, investors and users worry about the digital currency and its future.
Nigeria was in the limelight in 2021 when it became the first country to launch its CBDC—–eNaira- it was touted as the way to bring banking to all citizens of the African nation.
According to the reports after one of the launches of the eNaira, the adoption of the digital currency is not going well, and the government noted in its report that only 0.5% of Nigeria’s 217 million citizens are using the CBDC issued by the Central Bank.
The Nigerian population is known as the most crypto-enthusiast nation in Africa. According to the ranking, it is the continent’s top nation with the highest crypto adoption rate, and Nigeria is ranked 11th in global crypto adoption.
As per some reliable data from 2022, 27-35% of the Nigerian population between the age group of 18-60 hold cryptocurrency.
Nick Giambruno, a Geopolitical Analyst, highlights the Nigerian eNaira as ‘a massive failure.’
The eNaira was launched by President Muhammadu Buhari, aiming that launch of Africa’s first Central Bank Digital Currency(CBDC) would “increase remittances, foster cross-border trade, improve financial inclusion and enable the government to make welfare payments more easily.”
Despite the failure, as termed by Nick, the governor of the central bank of Nigeria, Godwin Emefiele, stated that the project of CBDC has gained success “Since its launch, a total of N8 billion, consisting of over 700,000 transactions has passed through the eNaira platform.”
To enhance the adoption of the eNaira at primary level director of the Central Bank proposed Keke NAPEP(tricycle taxis) and its users a 5% discount for using CBDCs as a payment mode.
The CBN Director and supervising authority of the recently launched initiative noted that the program had been started to make users familiarize people how the eNaira works.
He added, “We hope this engagement will improve everybody’s understanding of eNaira, know its benefits, and that the people we engage will help us drive its use, as well as educate people about what it is.”
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
