Hundreds of thousands of Nigerians have opened digital wallets to keep eNira, Africa’s first digital currency, but skeptics warn that distrust of the government could undermine its establishment.
With the launch of eNaira on October 25, the most populous country in Africa has become the latest country to launch digital currencies, by jumping into other central banks around the world. France, China and Germany are all testing e-currencies. Six Caribbean countries have already established digital currency.
Demonstrating the rapid development of digital currency, the G7 high-end economy group last month issued guidelines to ensure that the funds “will help and not harm” the monetary and financial system.
Razia Khan, chief financial officer for Africa and the Middle East at Standard Chartered Bank, said central banks are concerned about “the need to use digital payment systems” because of the epidemic, and want to “stay in control.” it’s going well ”.
A Central Bank of Nigeria official said that the first week and a half – when about 400,000 new wallets were registered in many countries and customers traded 12,500 worth 46.3m naira ($ 113,000) – it was a “wonderful achievement”. This was the case even though customers complained about the complicated way of writing.
Experts doubt whether digital naira technology – built on blockchain technology, but not cryptocurrency – could meet the goals of a central bank: lowering commodity prices, boosting outbound remittances including remittances, bringing more people into the financial system and allowing for more space. a lot of public-run funding and welfare.
“The issue is that all of this can already be fully addressed using the existing payment system,” said Adeduwa Ademuwagun, a Songhai Advisory expert. “Nigeria is the capital of fintech in Africa, so there are many, many ways to pay for a person, and I already pay for it.”
At the official launch of eNaira last month, Nigerian President Muhammadu Buhari said it could boost Nigeria’s total economy – which was $ 432bn last year – and $ 29bn over the next 10 years.
Ronak Gadhia, a researcher at a bank that focuses on EFG-Hermes markets, said cheap sales could make eNaira “significant and disruptive… But there are doubts about how it will be used everywhere.” half of the Nigerian population does not have a fixed bank account, unstable assets represent half of GDP and 95 percent of transactions are still in cash.
“The government knows exactly what you are doing [with a digital currency] and in places like Nigeria where there is little trust between Nigerians and the government there can be doubts about child rearing, ”he said.
He also mentioned how the central bank had suspended the accounts of people who had participated in the brutal #EndSARS protests that swept Nigeria last year. “ENaira makes it easier if the government wants to close someone else’s account… Or the entire system,” he added.
The launch of eNaira comes nine months after the central bank effectively banned cryptocurrencies including Bitcoin, which was used to support the #EndSARS protests, for disrupting the financial system and could be used to support terrorists. Nigeria has become one of the largest markets for cryptocurrencies in Africa, with its citizens using it to raise money, make money amid growing unemployment and block the declining naira.
The idea of effectively banning crypto was criticized by many at the Lagos fintech exhibition, which has attracted billions of dollars in commercial capital in recent years.
Victor Asemota, a Nigerian professional businessman, who agrees with the views of others, said he was “missing out on what eNaira needs to address”. a post on Twitter last week. He also said that the handouts offered by other Nigerian fintech companies already help pay and reduce purchasing costs.
Gadhia agreed, but warned that it was too early to reduce the possibility of eNaira. “Given the amount that Nigeria has to offer it seems low, but I can’t say it’s disappointing or surprising,” he said. “Right now it looks a little weird, but I think it’s still early days.”