As cryptocurrencies continue to grow in popularity, another type of digital currency is also gaining traction, namely central bank digital currencies. Unlike decentralized and volatile crypto, these currencies are issued by governments and simply serve as a digital version of the country’s official currency. More … than 90 countries are currently studying the idea of creating one (instead of just 35 in May 2020). In Africa, Nigeria took the lead and launched the continent’s first CBDC, eNaira – ironically a few months later. forbidden crypto trading.
The nation has big plans for the brand new digital token which has been developed by the Barbados-based company bitt, a fintech company that has also developed one for the Eastern Caribbean Currency Union. During the official launch of the currency on October 25, President Muhammadu Buhari said that eNaira and its underlying technology had the potential to increase Nigeria’s GDP by $29 billion in 10 years.
But as for the citizens? Despite great interest in crypto (Nigeria has one of the highest crypto adoption rates in the world, even with the trade ban), their reactions to the official digital currency have been decidedly mixed. Some were very eager to start using it, while others encountered technological problems and some, suspicious of the government’s agenda, vow never to use the token. We spoke to Nigerians to get their perspective on how the CBDC experience is going so far.
Early excitement (and recriminations)
Early adoption rates and downloads of the eNaira app for individuals and businesses demonstrated widespread interest. Within hours of eNaira’s launch, the Speed Wallet app for individuals had already registered over 4,000 downloads and the merchant application recorded 1,000 downloads. Ten days later, the speed wallet app had accumulated 367,000 downloads and the merchant app had been downloaded 58,000 times.
Central Bank spokesman Osita Nwanisobi said there had been nearly half a million downloads only three weeks after the launch of the virtual currency, with approximately $150,000 of virtual currency having been exchanged at that time. He also claimed that up to 78,000 traders from 160 countries signed up to the Traders Wallet in these first three weeks. By the end of January, 95 days after eNaira’s debut, the app had been downloaded some 694,000 times.
While this early enthusiasm shows that eNaira is a welcome development for many Nigerians, the app’s 3.7-star rating and numerous negative reviews highlight issues with the registration and verification processes that have created significant barriers for many citizens wishing to use eNaira.
A reviewer on the Google Play Store, who called the app “very disappointing”, complained, “I was an early pioneer of this app. From the day I finished registering on the app, I couldn’t log in. Even when I pretended to have forgotten my password, no email was received from the developers to make changes to a new password.
Others expressed similar sentiments. “I signed up earlier and it didn’t work, so I tried again later and got an error message that BVN [Bank Verification Number] has already been recorded,” one reviewer said. “So I tried to reset my password but OTP didn’t reach my email. It’s frustrating and annoying.”
A satisfied user
Ọláṣùpọ̀ Ajia, a 34-year-old researcher in the Department of Physics and Astronomy at the University of Southampton, is one of the first eNaira users who was happy with the experience.
Ajia told us the transfers were quick and smooth. Since the eNaira is directly linked to his bank account, all he had to do to dive into the realm of digital currency was to make a transfer from his banking app and follow a set of instructions including entering its token key.
The experience, however, was not entirely seamless. Ajia said he encountered problems setting up his digital wallet. eNaira app sends verification link to users to verify emails, and its email client was not supported. This quickly became a problem. However, unlike many who have reviewed the app, he says the responsiveness of customer service helped him resolve the issue.
Besides being a personal user, Ajia is optimistic about the CBDC’s potential to help improve Nigeria’s economic future.
“I absolutely think it has the potential to improve Nigeria’s economy,” he said. “But the strict requirement of having a BVN to be able to open an eNaira wallet already makes it quite exclusive and inaccessible to these Nigerians.”
The problem highlighted by Ajia is one that could prevent eNaira from reaching its full potential. Bayo Olugbemi, President of the Chartered Institute of Bankers in Nigeria, said that eNaira represents a step to deepen financial inclusion and integrate millions of unbanked Nigerians into the banking system. However, eNaira’s BVN verification requirement contradicts this, as unbanked Nigerians do not have one to log into the system.
More out of curiosity than anything else: a skeptical user
One Nigerian who is still unconvinced is Mary Mezue, a 26-year-old product manager at a fintech company in Lagos. Mezue said if Nigeria is fighting financial inclusion, then eNaira is not a big step forward in addressing it.
A fintech insider, Mezue is also unimpressed with the technology, saying it was not innovative and looked more like a copycat.
Worse, when she first downloaded the app in November, users were unable to transfer funds outside of their wallets, she said, making it more of a box. digitized savings than anything else. Recent updates have allowed users to send and receive money, but she remains skeptical.
“Most of the downloads right now are out of curiosity and I don’t think people would want to use an app that doesn’t give anything different than what they’re used to,” Mezue said.
A recalcitrant who refuses to consider eNaira
Asoegwu Kingsley, who works at a PR firm in Lagos, told us that he has no plans to start using the state-backed digital currency.
“I don’t trust the current government, so why would I use their digital currency? For a country that banned cryptocurrency transactions by launching its own digital currency? he said. “Something is wrong.”
Kingsley pointed out that one of the main draws of cryptocurrencies for many Nigerians is actually the lack of central oversight. He fears that the launch of eNaira is a ploy by the government to monitor the finances of Nigerians.
And because it is simply pegged to the regular Naira, Kingsley noted that eNaira lacks the upside potential of cryptocurrencies.
“Finally, the value of E-naira might not be speculative like with crypto. eNaira would rarely grow like with other cryptocurrency assets – that is subject to speculation,” he said. “People will hardly invest in a digital asset that might not bring them quick returns because eNaira does not promise it.”
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