The launch of Nigeria’s Central Bank Digital Currency (CBDC) had given hope to Yusuf Ibrahim to bring an end or minimise the daily charges his banks exploit from him for engaging in online transactions on his mobile phone.
Yusuf stated that he was among the first adopters of the digital naira, which was christened eNaira and had high hopes on its impact.
“When I was opening my wallet, I had the idea of moving all my money to the wallet and leaving little to the banks to prevent their charges, which often accumulate to thousands by the end of the month.”
But three years after the country became the second country in the world to launch, Yusuf said he never moved any funds into the account due to the event that played out when the Central Bank of Nigeria (CBN) banned the trading in cryptocurrency.
“The launch of the eNaira preceded the ban of cryptocurrency in the country. We all saw the clampdown on accounts of those using crypto later on, so it gave me a rethink. I feel the institution can block my account if they feel I contravene any financial rule. So, I decided to jettison the idea of putting all my money in one basket with the CBN.”
“I am crypto enthusiast and I know the advantages of digital currency but the ban coupled with trust issues on the Nigerian financial system made me not go ahead with funding my wallet. If not for the low transaction charges, I feel there is no other incentive to use the wallet.”
Suleiman Adam, a journalist with a local radio in Kano State, said he abandoned the use of the eNaira in 2022 as there was no update to some bugs he encountered while using it.
Adam, who is a crypto enthusiast said the lack of update made him feel the CBN was not serious on bringing more people on board as he continued to face the challenge of acceptability of the eNaira in transactions.
“The wallet did not engage in any update while I was using it and I could remember I lost the sum of N10,000 while I was transferring money from my mobile bank app into the eNaira wallet. Till date, I am yet to get the money back.”
Also highlighting the impact of the ban on cryptocurrency trading, he said,
“For me, the initiative is a good one and I believe it would have softened the impact of the cashless policy that was introduced in early 2023 when the old currency was banned as a legal tender for transaction. The crypto guys would have done a deal in influencing more people to join in their community.”
For Maryam Ahmad, she opened the eNaira wallet as it was then in vogue and the talk of the town.
“I opened it to know if there will be any benefit in the long run for using it but I later found out that there was no difference with it and the online banking transactions I do with my bank. Though I heard the charges when using it are low, it would have been encouraging if there was an incentive to use it. For instance, I might be given free N10 or N5 for doing certain transactions.”
The lack of preparedness in the roll out of the initiative was also visible in Galadima, a suburb of Nigeria’s capital, Abuja.
In 2022, representatives of the CBN had visited the popular roundabout to propagate the use of eNaira by commercial tricyclists to serve as a means of receiving fares from passengers.
The then Coordinator, Technical Working Committee on eNaira and Director of information technology, CBN, Rakiya Muhammad, said the use of the digital currency by SMEs will determine its success and achieve the bank’s cashless policy.
“The adoption drive is to promote awareness for them to understand what it is, on-board more people to use it in a simplified way. How they can use the platform for their daily transactions and help us to be ambassadors for this product, which is a national asset for everyone in the country as it is the same as what is used daily.”
She said the use of the currency does not require technical knowledge as it has a simplified application which can be gotten through “The mobile app for smartphone users or use of the USSD channel which is *997#.”
At the same event, the CEO of Bizi Mobile, Aminu Bizi, who was a consultant and merchant partnering with the CBN in the implantation said the CBN introduced a subsidy for the riders and their customers to attract users.
“A customer has a 5 per cent subsidy on each transaction. If you are to pay 100 for a ride, you will pay N95 while the rider will also get another N5 making it N105.”
Aminu said the aim of the campaign is to reach the grassroot in Abuja and in the coming weeks, to Lagos before it is introduced in other states.
However, when this reporter visited the roundabout, most of the tricycle riders said the CBN and its partner never came back to onboard them on the platform.
One of the riders, Auwal Ibrahim, said two years after the CBN took the campaign to the place, there were only left with two umbrellas, shirts and face caps as memento.
“I wore the shirt they gave a day before you came here,” Ibrahim told this report, stating that the umbrella, which is now used by a Point-of-Sale operator in the vicinity was supposed to serve as a shade for the Bizi mobile agent that would have onboard them and put them through how to use the currency to transact.
“They never came back after the fanfare and that begs question on their sincerity in making people use the digital currency. We all suffered during the cash crunch that followed but the CBN failed to implement their own digital currency successfully, how do they expect the cashless policy to be implemented smoothly.”
Nigeria’s rushed implementation
Nigeria became the first African country and the second in the world to introduce the CBDC with a fanfare in October 2021, after The Bahamas.
According to the CBN, eNaira was a digital version of the physical naira note designed to enhance financial inclusion and support its cashless policy.
While there was an initial rave on the eNaira, recording 700,000 downloads as of December 2021 and over 35,000 transactions on the platform, it has over years struggled to gain traction.
When the news of Nigeria mulling the launch of its CBDC made the airwaves in June 2021, a pilot program was announced.
Though the CBN said it had researched digital currency for two years.
But the eNaira fully went live four months later leading to a haphazard implementation that has become almost dormant three years later with most accounts becoming inactive.
According to the International Monetary Fund (IMF), in its ‘Nigeria Staff Report for the 2024 Article IV Consultation,’ the adoption of the eNaira has been slow as the 13 million eNaira accounts created mostly remain inactive.
The report, which was launched in May 2024, stated that the number of transactions on the platform reached 854,512 but from consumers to merchants, with a total value of N29.3bn.
For a country of over 200 million population, the low adoption and lackluster attitude towards its utilisation indicated it was rushed on Nigerians and the CBN did not make adequate research on how the populace would accept.
Nigeria was not the only country that explored the use of digital central currencies, according to the State of Inclusive Instant Payment Systems in Africa (SIIPS) 2024 report by AfricaNenda Foundation.
25 countries (six of which are sharing the Central African Franc and are exploring CBDC as one) have explored, piloted, or launched CBDC. With Egypt being the first to announce its CBDC in 2018, which is still in research phase while Ghana piloted its use in 2021.
Initiative not inclusive
The report by the IMF noted that a great challenge for the eNaira is lack of accessibility to all the population in Nigeria as its design was targeted to those with bank accounts.
“While ensuring adequate financial integrity safeguards to prevent its use for financial crimes. eNaira is currently only accessible to those people with bank accounts. A tiered mechanism is in place for the issuance of eNaira wallets, depending on the level of identification documentation users provide. Each tier has certain balance and transaction limits to prevent abuse of the system,” the report explained.
It acknowledged that this would limit access for the people who need financial inclusion the most.
Similarly, while the eNaira has a dedicated USSD code to enable those without smartphones to conduct transactions with it, a dial of the *997# code indicated it was not operational. With this, the majority of tricycle riders like Ibrahim would not be able to use it, probably a reason the bank did not continue with the initiative for the riders.
CBN did not get the buy of banks
Ridwan Adam, a worker with one of the elite banks in the country, said the failure of the CBN to get the banks in the country to key into the scheme was one of its shortcomings.
He said the banks viewed it as a competitor to their digital online transactions, which would inevitably threaten their revenue through the medium.
“The CBN did not do adequate sensitisation on the eNaira as most people will feel it is a duplication of the online transaction they are used to. Even though the CBN would have had an edge over banks, we all know it is difficult for people to accept change if they are already served by a competing entity.
“The lack of incentive to bring people on board was not there. We saw what the fintechs did when they started in Nigeria, they gave bonuses and other incentives for people using their platforms and today we can see how they have permeated the fabrics of digital banking. Most people now trust them more than the conventional banks.
CBN to review implementation of eNaira
In what looks like the abandonment of the eNaira project currently, the governor of the CBN, Olayemi Cardoso, however, pledged to review the implementation of the eNaira, to optimise broad and positive economic impact.
The governor, who made the plans of his 2025 project did not explain on how it would be achieved, the bank had in September 2024, stated it would expand the use of eNaira, for payments into government accounts and allow Ministries, Departments and Agencies (MDAs) to initiate vendor and beneficiary payments.
This was contained in a new release on Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for Fiscal Years 2024-2025.
While it explained that it is part of its efforts for the adoption of the eNaira in both public and private sectors, it said the deployment is part of eNaira version 2.0, which focuses on expanding the role of deposit money banks in its usage.
“The CBN shall sustain efforts in enhancing the eNaira and driving its adoption. This includes the deployment of eNaira version 2.0 with focus on wholesale Central Bank Digital Currency (CBDC) to increase the participation of deposit money banks and empower them to drive its adoption; implementation of offline functionality, programmable money; and more collaboration with federal and state governments to increase its adoption.”
Way forward
A crypto expert and co-founder of Bekonta, Japhet Johnson, while disagreeing that incentive was needed to attract users of eNaira said the major lapse of the CBN was the opaqueness of how the currency works.
Johnson, while calling for collaboration between the CBN, banks and innovators, stated that the apex bank needs to ensure transparency for users to have the trust on transactions.
“A lot of people are currently tilting towards the block chain. So, if you are coming with something like this, you need to actually put that level of transparency and openness. Look at the current policy on the open forex exchange and the impact it had in reducing the dollar to the naira. The moment you are trying to transact, you can see who is selling dollars; which bank is having so much dollars and who is there to buy on the platform. That level of trust makes the whole economy shift towards the positive side. And that’s what we are talking about.”
“Let’s not just say we want to bring eNaira when we don’t know who is minting and how it is minted. We should be able to build that trust and make the infrastructure open so that a person with a website can integrate it for transactions. Also, the technology, do we have open APIs or those endpoints that other fintech platforms can be able to integrate on their platform to transact with the eNaira? So, I feel at the end of the day, we are very good with making policies, but implementation is something that has really been a problem for us. I don’t really feel that it is not going to work, but how to make it work is something that needs to really be looked at.
On incentives, he said even though Nigerians, like anything that has to do with bonus, most people that do transactions are not really concerned about bonus.
“What we want is smoothness and reliability. I don’t really care whether you are giving me N5. We have come to a point where the major players don’t really look at that. When you look at MoniePoint, your joy is that you do the transfer. You are sure that there won’t be a reverse. It is this case of reverse that people are not even accepting bank transfers in some businesses.
This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop.