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ABUJA – The Central Bank of Nigeria (CBN) has reported a significant increase in the usage of its digital currency, eNaira, with transaction volumes seeing an increase of 284.6% to N9.78 billion (1 $ = ₦896). This increase comes against a backdrop of a decline in the circulation of traditional currency, which fell by 14% to reach 2.65 trillion naira. The increase in digital transactions highlights a shift in consumer behavior, even as the country grapples with the implications of its earlier ban on cryptocurrencies.
Despite the increase in the number of transactions, eNaira faces obstacles to widespread adoption. Chinedu Albert points out that the previous ban on cryptocurrencies in Nigeria had a negative impact on the public’s reception of the eNaira. This stands in stark contrast to Nigeria’s position as the leading country in the global use of cryptocurrencies, having overtaken the United States, according to data from Chainalysis.
The central bank’s digital currency is struggling to generate robust user engagement. Reports indicate that only a small fraction of eNaira wallets are actively used on a monthly basis. This suggests that even if digital currency is adopted, its use is not yet widespread.
Adoption of the eNaira is on the rise, particularly due to the scarcity of naira notes. Transactions increased by 63%, reaching N22 billion, and the number of eNaira wallets exceeded 13 million. Nonetheless, the digital currency faces trust issues related to naira governance and skepticism about its effectiveness.
The reversal of the crypto ban on December 23 has not entirely eased concerns about future regulatory threats. The International Monetary Fund (IMF) has recognized the potential of eNaira to bring transparency to the informal economy. However, attempts to integrate digital currency into mobile money services are hampered by Nigerians’ strong preference for cash transactions.
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