eNaira: Prospects brighten as app approaches 1m downloads

Predictions that the launch of the Central Bank of Nigeria (CBN)’s digital currency, the eNaira, would significantly boost the nation’s Gross Domestic Product (GDP) could prove accurate as its application is on track for one million downloads in the next few months, writes TONY CHUKWUNYEM

In his address at the official launch of the Central Bank of Nigeria (CBN)’s eNaira on October 25, 2021, President Muhammadu Buhari said that the digital currency and its underlying blockchain technology had the potential to increase Nigeria’s Gross Domestic Product (GDP) by $29 billion over the next 10 years. According to Buhari, the digital currency will help increase remittances, foster cross border trade, improve financial inclusion, make monetary policy more effective and enable government to transfer grants directly to citizens eligible for specific welfare programmes.

GDP boost

As the president put it, “aside from the global trend to create digital currencies, we believe that there are Nigeria-specific benefits that cut across different sectors of and concerns of the economy. The use of Central Bank Digital Currencies (CBDCs) can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country. “Alongside digital innovations, CBDCs can foster economic growth through better economic activities. Indeed, some estimates indicate that the adoption of CBDC and its underlying technology called blockchain can increase Nigeria’s GDP by $29 billion over the next 10 years.” However, prior to the launch of the eNaira, CBN had issued several statements highlighting the significant positive impact that the digital currency would have on the country’s economy. For instance, on August 30, 2021, while announcing that it had engaged global fintech company, Bitt Inc., as the technical partner for the eNaira, the apex bank, in a statement by its Director, Corporate Communications Department, Mr. Osita Nwanisobi, emphasised that the digital currency had the potential to resolve many of the issues currently associated with cross-border payment and could help improve forex accretion and utilisation. In addition, he said issuing a CBDC could reduce demand for foreign currencies as Nigerians could use CBDC to transact both locally and across borders in future. Nwanisobi also explained that eNaira was designed to complement rather than replace the existing paper money and coins currently in circulation. He highlighted other benefits of eNaira to include a marked improvement in CBN’s monetary policy transmission, adding that transactions on eNaira would be at lower cost and greater time efficiency for all users. Still, given that globally, only a few Caribbean countries had preceded CBN in the launch of a CBDC as well as the fact that many people could not be convinced that CBDCs are different from cryptocurrencies such as Bitcoin, eNaira skepticism remained rife in some quarters.


However, within 24 hours of President Buhari’s launch of eNaira, the digital currency, which has two applications – eNaira speed wallet and eNaira speed merchant wallet – the application had been downloaded by over 200,000 users. Although the eNaira speed wallet version of the application was briefly pulled down from the Google Play store to enable CBN upgrade the app’s functionalities, it was back online after 24 hours. Indeed, 10 days after the launch of the eNaira, a report showed that the eNaira speed wallet, which is for individuals, recorded 367,000 downloads, while the eNaira speed merchant wallet for businesses recorded 58,600 downloads. Specifically, the report indicated that the eNaira speed wallet for iPhone users increased from 75 countries penetration on October 28 to 81 countries in ten days. For Andriod users, country penetration moved from 148 countries as of October 28 to 163 countries at the end of October. Also, the merchant’s wallets for iPhone users saw a country penetration from 51 countries on October 28 to 67 countries as of October 31, 2021. For Andriod users, country penetration moved from 177 countries to 186 as of October 31, 2021. Furthermore, on November 16, Bloomberg reported CBN spokesman, Nwanisobi, as saying that the adoption rate for the eNaira “had been excellent.” He reportedly stated that over 488,000 people had downloaded the eNaira speed wallet, while about 78,000 merchants from over 160 countries had enrolled. Nwanisobi added that about N62 million worth of eNaira had been traded since the digital currency was introduced on October 25, 2021. Similarly, commenting on eNaira adoption rate in his address at the 56th Chartered Institute of Bankers of Nigeria (CIBN)’s Annual Bankers Dinner, held late last month, CBN Governor, Mr. Godwin Emefiele, disclosed that in less than four weeks after it was launched, the eNaira app witnessed almost 600,000 downloads. He said: “In less than four weeks since its launch, almost 600,000 downloads of the e-Naira application have taken place. Efforts are ongoing to encourage faster adoption of e-Naira by Nigerians who do not have smartphones. “The support of the financial industry will be critical in the ongoing deployment of e-Naira and efforts are on-going to encourage continued partnership between CBN and stakeholders in the financial industry.” The CBN governor noted that building a robust payment system that would provide cheap, efficient and faster means of conducting payments for most Nigerians had always been the focus of the apex bank. According to him, “the growing pace of digitisation globally makes it essential that we leverage digital channels in fulfilling this objective.”

IMF’s backing

Interestingly, in what industry watchers described as a clear endorsement of the CBN’s decision to roll out eNaira, the International Monetary Fund (IMF), in an explainer, which was released on November 16, said that the launch of the digital currency was drawing substantial interest from the outside world, including from central banks. The Fund attributed the global interest in eNaira to “the size and complexity of Nigeria’s economy.” Noting that its Monetary and Capital Markets Department “has been involved in the eNaira rollout process, including by providing reviews of the product design,” the IMF said it remains available to help with technical assistance and policy advice on eNaira, which, according to the Bretton Woods institution, is the second Central Bank Digital Currency (CBDC), “fully open to the public after the Bahamas.” IMF pledged its readiness to col-laborate with the Nigerian authorities on “data analysis, cross-country studies, sharing the eNaira experience with other countries and discussing further evolution of eNaira, including its design, regulatory framework and other aspects.” It pointed out that while eNaira, like digital currencies elsewhere, carries risks for monetary policy implementation, cyber security, operational resilience and financial integrity and stability, the country’s authorities had taken measures to manage the risks. For instance, on the risk of eNaira wallets effectively functioning, as a deposit at the central bank, which may reduce demand for deposits in commercial banks, IMF said: “The transfer of funds from bank deposits to eNaira wallets is subject to daily transactions and balance limits to mitigate risks of diminishing the roles of banks and other financial institutions.” It further stated: “Financial integrity risks, such as those arising from the potential use of eNaira for monetary laundering are mitigated by using a tiered identity verification system and applying more stringent controls to relatively less verified users. “For example, for now, only people with a bank verification number can open a wallet, but, over time, coverage will be expanded to people with registered SIM cards and to those with mobile phones but no ID numbers. The latter categories of holders would be subject to tighter transactions and balance limits. “Even so, wallet holders who meet the highest identity verification standards cannot hold more than five million naira (about $12,200) each in their eNaira wallets. To address cybersecurity risk, regular IT security assessments are expected to be conducted.” Analysts point out that since the launch of eNaira on October 25, more countries have expressed interest in issuing a CBDC. It was widely reported last week, for instance, that Indonesia’s central bank, Bank Indonesia, announced that it was considering issuing a CBDC to fight the use of cryptocurrency. Bloomberg quoted an assistant governor of the central bank as saying that “a CBDC would be one of the tools to fight crypto. We assume that people would find CBDC more credible than crypto.”


Indeed, given its clear advantages over cryptocurrencies, especially with respect to the fact that cryptocurrency traders stand the risk of losing all their money, analysts believe that the rate of adoption of eNaira will speed up in the coming weeks and months, a development that will undoubtedly have a positive impact on the country’s economic growth.




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