If several African states are working on virtual currency projects, Nigeria seems to have a head start. It is the first to issue its own digital currency.
An eNaira will be the equivalent of naira in banknotes, but in dematerialized form. In principle, it will exist alongside species without replacing them. This form of electronic money, issued by the national central bank, will be accessible to households and businesses.
The digital naira will be an additional, easier-to-use payment solution for those without bank accounts, thus contributing to accessibility and inclusion. But to be accepted, a digital currency must allow simple, free, risk-free and trust-inspiring payment, therefore under the control of a central bank.
Rakiya Mohammed, Director of the Information Technology Department of the Central Bank of Nigeria (CBN), has been working for two years on this enaira project, which she says will allow “to improve financial inclusion, simplify payments and reduce their costs.”
Following a call for tenders, the CBN chose the Caribbean fintech Bitt to help it deploy the eNaira. Bitt has already led the development and launch of the first digital currency issued (jointly) by several Caribbean countries. For its governor, Nigeria’s economy should benefit from this digital currency through improved foreign trade and the efficiency of remittances. Many Nigerians living abroad move away from official channels to send money home.
The authorities hope in the process to reduce the interest of Nigerians in crypto-currencies which escape government control. For Nigerians, cryptocurrencies are above all a means of escaping the weakness of the naira in the parallel foreign exchange market and they use them to facilitate their transactions with the international, despite the ban by the Central Bank of Nigeria .
But eNaira does not generate the same enthusiasm everywhere. Some analysts say Nigeria already uses a plethora of electronic payment channels, including online banking and mobile apps.
“Even if the eNaira, issued by the Central Bank, will follow the official exchange rate, this currency should initially be used only to facilitate transactions”, emphasizes Ayodeji Ebo, head of investments at the financial company Chapel Hill Denham.
Nigeria is not the only African country to want to embark on the digital adventure. Ghana indicated in June 2021 that it was very advanced in this project without setting a clear deadline. The central banks of South Africa and Rwanda are also saying they are very interested.