The Central Bank of Nigeria (CBN) is taking measures to improve adoption rates for its Central Bank Digital Currency (CBDC), known as eNaira. According to the CBN, a new key feature will play a pivotal role in enhancing adoption. While previous versions included QR codes, this new feature is expected to significantly improve user experience and encourage wider acceptance of the CBDC.
Speaking about the CBN's approach to technological advancements, the banking regulator's representatives emphasised the importance of staying ahead in the digital world. The CBN aims to embrace new technologies and innovations to enhance its services.
To further leverage the benefits of new technology, the central bank announced that the eNaira will be equipped with programmability features. This programmability will enable the CBN to restrict CBDC payments to specific government programmes, reducing the risk of fraud. For example, funds allocated for farmers to acquire agricultural tools or other specific purposes can be programmed to be used exclusively for those purposes, preventing any diversion of funds.
CBN highlighted several advantages of the CBDC for retail users, including eliminating settlement risks and enabling fast transaction times. The eNaira also addresses the issue of financial inclusion, making it accessible to a broader range of individuals and businesses in Nigeria. As one of the pioneering countries with a CBDC offering, Nigeria hopes to lead the way for others to learn from their experiences.
While the eNaira was launched in 2021 to join the select group of countries with a CBDC, its adoption rates have not met expectations. The CBN has explored various options to drive usage, including use cases in the transportation sector and incorporating USSD functionality. However, low adoption rates have persisted, with former CBN Governor Godwin Emefiele attributing some of the challenges to commercial banks prioritising their profitability over promoting the CBDC.
Expanding use cases
In an effort to expand the CBDC's use cases and address dollar shortages in the country, the CBN approved the use of eNaira for foreign remittances by international money transfer operators (IMTOs). While this move has been welcomed as a potential solution to the dollar shortage issue, the CBN clarifies that the use of eNaira for remittance remains optional, and traditional dollar payments will continue to coexist.
With continuous efforts to enhance eNaira adoption and explore new use cases, the CBN is committed to positioning itself at the forefront of the digital revolution in the financial sector.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now