IMF Laments Slow Adoption Of eNaira In Nigeria
TECHDIGEST – Since its launch in 2021, the usage of the eNaira — Nigeria’s digital currency — has refused to pick up, the International Monetary Fund has disclosed.
According to the fund, only about eight per cent of eNaira wallets are in use, with an average transaction value of N53,000.
It stated that as of November 2022, total eNaira wallet downloads amounted to 942,000.
It revealed this in its ‘Staff Report for the 2022 Article IV Consultation: Key Issues’ and ‘Nigeria: Selected Issues’ reports.
The IMF said, “Despite some initial technical glitches (Coincu, 2022), no major risk factors (e.g., a large-scale cybersecurity event) have materialised.
“However, the adoption of eNaira by households and merchants has been rather slow. After a strong initial uptake, wallet downloads have slowed, reaching 0.8 per cent of bank accounts, and merchant wallet downloads amount to about 10 per cent of merchants with Point-of-Sale terminals.
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“Similarly, wallet activity is low, with most wallets appearing inactive. The average number of weekly eNaira transactions since the launch amounts to only eight per cent of wallets, with an average transaction value of N53,000 (about $120).”
When Nigeria launched its central bank Digital Currency, it became the second country after The Bahamas to launch a CBDC.
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At the launch, the President, Major General Muhammadu Buhari (retd), noted that the eNaira would help more people and businesses move from the informal to the formal sector.
He said, “Let me note that aside from the global trend to create Digital Currencies, we believe that there are Nigeria-specific benefits that cut across different sectors of and concerns of the economy.
“The use of CBDCs can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country.”
According to IMF, the eNaira is supposed to increase financial inclusion. It noted that for this goal to reach, the CBN needs to allow those without bank accounts but with mobile phones access the digital currency.
It also noted that the use of digital currency could lower remittance fees in the country.
Commenting on how the country can drive increased usage of the eNaira, the Washington-based lender noted the apex bank needs to create the right relationships with mobile money operators and engage in public and private partnerships.
It said, “Setting the right relationship with mobile money.
“A well-designed public and private partnership are required to ensure the proper safeguard of e-money/mobile money, considering that the private financial sector’s contributions to financial inclusions could be negatively affected depending on the design of eNaira’s use for financial inclusion.
“eNaira could be usefully integrated into the existing mobile payment system by (i) functioning as a safer store of value for mobile money users through an integrated mobile-CBDC wallet.”
