Chinedu Albert, a legal expert in technology and innovation in Nigeria, has indicated that the 2021 prohibition by Nigeria’s Central Bank, which barred regulated financial institutions from providing services to cryptocurrency exchanges, has significantly impeded the uptake of the country’s Central Bank Digital Currency (CBDC), the eNaira.
Albert pointed out that while the eNaira is a commendable initiative, it essentially emerged as a response to the government’s widely criticized comprehensive ban on cryptocurrencies and other digital assets.
Chainalysis' 2021 Global Cryptocurrency Adoption Index placed Nigeria high, underscoring the demand for a currency resilient to governmental policies and inflation, attributes offered by certain cryptocurrencies. Yet, Albert observed that the eNaira’s adoption has been minimal due to its lack of a protective feature, a core characteristic of cryptocurrencies. A 2022 study by KuCoin revealed that numerous Nigerians have started embracing cryptocurrencies as a reliable means to store and transfer assets, especially in light of the Nigerian naira’s 23% devaluation in the third quarter of 2023, as reported by local media. This decline is a major factor driving local investors towards inflation-resistant assets like Bitcoin.
Albert emphasized that Nigerians lack trust in both the naira and the central institutions governing it. He believes that widespread acceptance of the eNaira will only occur once the government regains the public's trust and the naira becomes more credible. The eNaira, which is Africa’s first CBDC and was launched on October 25, 2021, is available for all to trade. However, a May 2023 report from the International Monetary Fund revealed that the eNaira only sees about 14,000 transactions weekly, making up a mere 1.5% of total wallets. This suggests that an overwhelming 98.5% of wallets are inactive weekly, highlighting a disappointingly low level of adoption.
Despite the December 23 reversal of the ban on digital assets by Nigerian banks and financial institutions, the Central Bank of Nigeria (CBN) and its digital currency, the eNaira, continue to face significant trust issues. Past actions such as the crypto ban, closure of cryptocurrency-related bank accounts, manipulation of foreign exchange, and the recent redesign of the naira have contributed to a widespread negative perception of the central bank and its policies among Nigerians.
