Nigerian central bank’s decision of replacing older bank notes with bigger denominations amidst the rising inflation has created an opportunity for eNaira to flourish. The eNaira is the in–house Central Bank Digital Currency (CBDC) of Nigeria that was launched 18 months ago.
The decision of the Nigerian regulatory to replace older bank notes with the bigger denomination is a result of acute cash shortage in the country. The lack of physical cash in the country forced Nigerians to rely on eNaira. In Nigeria, cash always accounted for 90% of transactions. However, in recent times the value of the eNaira has increased exponentially by 63% and has reached 22 Billion Nairas i.e. $47.7 Million as reported by Bloomberg.
Furthermore, Godwin Emefiele, the governor of the Central Bank of Nigeria stated that the total number of CBDC wallets in circulation has grown by 12x in March 2023 when compared to October 2022 and it is currently valued at 13 Million. On contrary, the demonetization leads to a reduction in the circulation of cash from 3.2 Trillion Nairas to 1 Trillion Nairas.
The country minted more than 10 Billion eNairas and its payouts in government initiatives and social schemes also led to increasing CBDC adoption. In the words of Emefiele, eNaira has emerged as the preferred electronic payment channel that ensures financial inclusion and helps execute social interventions.
Recently, the integration of Metamask with Moonpay can also be seen as an alternative for procuring cryptocurrencies in Nigeria as this simplifies the process of buying cryptocurrencies without any credit or debit card. Thus, Nigeria is a potential market for digital currencies or assets.
