Nigeria has officially launched a new digital version of its currency, the eNaira, after postponing the operation initially planned for early October.

With this launch, Nigeria, Africa’s largest economy in terms of GDP and the continent’s most populous country (over 200 million inhabitants), is a pioneer on the continent whilst Ghana still has its e-Cedi at the testing stage.

Expectations are that the eNaira will further enhance the country’s GDP which the International Monetary Fund (IMF) projects to be $480 billion in 2021.

President Muhammadu Buhari said in a televised speech at the launch in Abuja, the capital of Nigeria, that the eNaira will boost the Nigerian economy in the next decade. According to him, the new digital currency would improve cross-border trade, financial inclusion for people outside the formal economy and increase remittances.

“Nigeria has become the first country in Africa, and one of the first in the world to introduce a digital currency to her citizens. The adoption of the central bank digital currency and its underlying technology, called blockchain, can increase Nigeria’s gross domestic product by $29 billion over the next 10 years”.
President Muhammadu Buhari

Increasing patronage of the eNaira platform

Since the launch of the eNaira platform, it’s received more than 2.5 million daily visits, with 33 banks integrated on the platform, 500 million Naira ($1.2 million) successfully minted and more than 2,000 customers on boarded, Governor of the Central Bank of Nigeria, Godwin Emefiele said at the launch.

The eNaira will complement the physical naira, which has weakened 5.6% this year despite the central bank’s efforts to stabilize the currency. Dr. Emefiele disclosed that “the eNaira and the physical naira will have the same value and will always exchange at one naira to one eNaira”.

The digital currency is expected to boost cross-border trade and financial inclusion, make transactions more efficient as well as improve monetary policy, according to the central bank.

Delay in launching the eNaira

Originally scheduled for October 1, the launch of the eNaira had been delayed by the Central Bank, citing the country’s independence anniversary celebrations.

Central banks around the world are looking to create digital versions of their currencies in response to the growth of online payments and to compete with crypto-currencies that are beyond the control of governments and global regulators.

Crypto-currencies are widely used in Nigeria, ranked in 2020 as the third largest user of virtual currencies in the world after the United States and Russia, by a study from specialist research firm, Statista.

With cryptocurrencies, Nigerians are mainly looking to escape the constant depreciation of the naira in recent years. These currencies also make it easier for Nigerians to receive money from the diaspora or move their savings out of the country.

Last year, China became the first major economy to launch a test version of a digital currency. Since then, at least five countries have launched their virtual currencies.

The issuance of the digital currency comes after the central bank earlier in February outlawed banks and financial institutions from transacting or operating in cryptocurrencies as they posed a threat to the financial system.