In October 2021, the Central Bank of Nigeria launched an electronic version of its currency, the eNaira, which it claims will make payments easier and expand financial services to millions of people.
As the first African country to do so, its progress will be watched by many hoping to see how the central-bank backed cryptocurrency may be deployed and used on the continent.
Potential Benefits of the eNaira
Increased access to capital, easier welfare disbursement, transfer of remittances from around the world, more revenue from tax collection, and the expansion of international payments are among the benefits the government is aiming for. This should, in theory, make money flow more freely and alleviate the challenges that users currently have with physical payments. Users can download eNaira wallets on both Android and iOS, and can fund their personal wallets through their bank accounts.
The Stress Test
However, in order to achieve widespread use, the cryptocurrency would have to prove that it is secure, stable, and far removed from the political influence that has bugged Nigerian e-commerce over the last couple of years. A recent Twitter ban and crackdown on cryptocurrencies are not exactly trust-earners for the body that is now trying to promote its own version of digital currencies, but the real test will be to see how the venture facilitates business and international trade. It will also have to find its place within a network of competing cryptocurrencies which are more reliable.
One for the Future
The eNaira is going to maintain the value of the physical Naira. It won’t earn interest or fluctuate like other cryptos, making it immune to the volatility that has made cryptos unsuitable for everyday use. Many banks and financial institutions are already lining up eNaira solutions, so it won’t be long before we have a better idea of where this is heading.
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