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Nigerian central bank reveals CBDC progress as it turns focus to financial inclusion

Godwin Emefiel: the central bank governor speaking at the eNaira hackathon | Global Government Fintech screenshot from the CBN's event video

Usage rates and growth targets for the first central bank digital currency (CBDC) in Africa have been presented just over nine months after its launch.

Nigeria, which is the continent’s most populous country, debuted the eNaira in October last year and its progress is being closely watched worldwide by nations toying with launching their own CBDC.

The Central Bank of Nigeria (CBN)’s governor used a speech at an eNaira-focused hackathon to reveal that about 270,000 digital wallets – of which more than 252,000 are consumer wallets and more than 17,000 are merchant wallets – are currently considered ‘active’ for the eNaira.

The total value of eNaira transactions to date stands at ₦/NGN4bn (about £8m) – a “remarkable” figure, Godwin Emefiele told the event audience. The eNaira app has been downloaded 840,000 times.

The CBN is aiming to achieve eight million active eNaira users through the next stage of a promotional push that will focus on using the CBDC to increase financial inclusion, he said.

“By next week, Nigerians – banked and unbanked – will be able to open an eNaira wallet and conduct transactions by simply dialling ‘*997’ from their mobile phones,” Emefiele said, going on to mention the integration of eNaira back-end tech with Nigeria’s NIBSS Instant Payments NIP (NIBSS is the ‘Nigerian Inter Bank Settlement System’ and NIP is an account-based, online real-time electronic funds transfer platform). “Shortly after this both merchants and consumers with bank accounts can use the NIBSS Instant Payments NIP to transfer and receive eNaira to any bank account of their choice,” Emefiele said, adding that this move would “further deepen the integration of the eNaira with the existing national payments infrastructure.”

Take-up target based on ‘diffusion of innovation’ model

Blockchain-based eNaira launched in the country – which has a population of about 211 million – on 25 October 2021, with the central bank having engaged Barbados-based fintech company Bitt as technical partner.

At the time the CBN described the eNaira as being on a ‘journey’ that would ‘continue with a series of further modifications, capabilities and enhancements to the platforms’.

During his speech, Emefiele said the eNaira’s first phase had focused on those with bank accounts and that the second phase “is intended to drive financial inclusion by onboarding the unbanked and underserved users, leveraging offline channels”. He continued: “Hence greater success is envisioned for the project, with phase two expected to deliver more gains, with the target of eight million active users based on estimations using the ‘diffusion of innovation’ model.” Diffusion of innovation theory seeks to explain the adoption of new ideas and technologies.

Fifty-five per cent of Nigerian adults do not have a bank account, according to the World Bank’s Global Findex Database 2021. This data also showed that just 35 per cent of Nigerian adult women have an account; just 33 per cent of poor adults have an account; and a 20 per cent difference in account ownership between adults in urban areas and those in rural areas.

The central bank governor listed the benefits to Nigeria of launching a state-backed digital currency as including helping with financial inclusion and poverty reduction; cheaper and faster remittance inflows; enabling direct welfare disbursements to citizens; and improving the efficiency of payment systems and cross-border payments.

Hackathon ‘first among many’

Emefiele was speaking at a hackathon that was co-organised by the central bank and the Africa Fintech Foundry (AFF) with the ultimate aim of encouraging eNaira use.

AFF is an initiative from Access Bank, a Nigeria-headquartered multinational commercial bank, that aims to ‘nurture and accelerate’ the growth of fintech start-ups across Africa.

Emefiele described the event – held in Abuja on 18 August and which saw 20 teams presenting their ideas – as a “continuation of the [eNaira’s] journey”, saying that he hoped the hackathon was “the first among many to come given the future of central banking is inextricably bound to innovation”.

The hackathon, he said, saw the central bank tapping into the “ingenuity and intellect of our youth to harness innovation that will help deepen the acceptability of our digital currency.”

“Innovative products and services built on the eNaira will enhance Nigerians’ participation in the digital economy and promote further development of a burgeoning fintech ecosystem in Nigeria,” he said.

FURTHER READING

‘Global surge in digital payments aids financial inclusion: World Bank’s Findex’ – news story (30 June 2022) on ‘The Global Findex Database 2021: Financial Inclusion, Digital Payments and Resilience in the Age of Covid-19’ report

‘Nigeria becomes first country in Africa to launch CBDC’ – news story (25 October 2021) on eNaira going live last year

‘Nigeria names digital currency partner as it prepares for eNaira’ – news story (3 September 2021) on the CBN inking a contract with Bitt

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Ian is editor of Global Government Fintech and also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo.