Nigerian Digital Currency Transactions up 63% Says Central Bank Governor – According to the Nigerian central bank governor, Governor Godwin Emefiele, there has been a 63% increase in the value of transactions involving Nigeria’s central bank digital currency (CBDC), amounting to $47.7 million (₦22 billion), and 13 million e-naira wallets have been downloaded since October 2022. The governor also disclosed that the currency in circulation decreased from over $6.9 billion (₦3.2 trillion) in September 2022 to around $2.2 billion (₦1 trillion).
The governor made these announcements during a briefing with local journalists on March 21st. As previously reported, the decline in the value of the naira banknotes in circulation is believed to be caused by the Central Bank of Nigeria (CBN)’s unsuccessful demonetization policy. The CBN had unveiled a plan to introduce newly designed banknotes and gave Nigerian citizens a few months to exchange their old 200, 500, and 1,000-naira banknotes.
The public’s perception of the short repatriation period and the Central Bank of Nigeria’s (CBN) inability to supply enough newly designed banknotes resulted in violent protests and calls for an extension of the deadline. Nevertheless, when the Nigerian Supreme Court ruled against the demonetization policy, the CBN changed its stance, announcing that the previously demonetized banknotes would continue to be accepted as legal tender until the end of the year.
There have been allegations that both new and old naira banknotes are difficult to come by, despite the fact that the Central Bank of Nigeria (CBN) has reversed its decision regarding the demonetization of the naira. Several Nigerian critics suggest that this scarcity could be a contributing factor to the recent spike in the value of e-naira transactions. According to a Bloomberg report, Emefiele is quoted as attributing the rise in e-naira transactions to the use of the CBDC by the Nigerian government for making payments to underprivileged groups.
Additionally, he mentioned that the opening of over 4 million e-naira wallets was a direct result of this. “The e-naira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions,” Emefiele added. Even though it is believed that the CBN has created over ₦10 billion worth of the digital currency, the governor stated that only ₦3.4 billion of the CBDC is presently in circulation.
The Nigerian central bank digital currency (CBDC) has experienced significant growth since its launch in October 2022, with a 63% increase in transaction value and 13 million e-naira wallets downloaded. While the decline in the value of naira banknotes in circulation has caused concern, the rise in e-naira transactions is seen as a promising step towards financial inclusion and executing social interventions.
The Nigerian government’s use of the CBDC for making payments to underprivileged groups has contributed to this increase, highlighting the potential for the e-naira to become the electronic payment channel of choice in Nigeria. As the CBDC continues to gain traction, it will be interesting to see how it evolves and impacts the country’s economy and financial landscape.