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Nigeria Turns to CBDC Amid Cash Shortage: A Closer Look

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It is reported that due to a shortage of cash, Nigerians are turning to the country\’s central bank digital currency (CBDC). The Governor of the Central Bank of Nigeria (CBN), Godwi

Nigeria Turns to CBDC Amid Cash Shortage: A Closer Look

It is reported that due to a shortage of cash, Nigerians are turning to the country’s central bank digital currency (CBDC). The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, told reporters at a news conference that since October last year, the number of eNaira wallets has increased more than 12 times to 13 million, and this year’s transaction value has increased 63% to 22 billion naira (US $48 million). The country’s CBDC was launched in October 2021. (Bloomberg)

The number of eNaira wallets in Nigeria has reached 13 million, with a 63% increase in transaction value during the year

##Introduction

In recent times, Nigerians have had to face a biting cash shortage, which has affected their daily transactions, businesses, and livelihoods. However, the country’s Central Bank Digital Currency (CBDC) seems to be providing some respite with its growing popularity. According to the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, the number of eNaira wallets has increased significantly since the CBDC’s launch in October 2021, indicating a shift towards digital transactions.

##What is the CBDC?

The CBDC is a digital currency issued by the central bank, which operates on a blockchain technology platform. It aims to leverage the benefits of the blockchain, such as transparency, security, and efficiency, while also providing an alternative to cash transactions. Transactions on the CBDC are carried out through electronic means, allowing for a quick and convenient mode of payment.

##The Rise of eNaira Wallets

Since the launch of the eNaira wallets, there has been a significant increase in the number of people adopting the digital currency. The CBN’s Governor reported that the number of eNaira wallets had increased by over 12 times, from 1 million to 13 million, since October last year. The popularity of this innovation is mostly due to its convenience, as it allows people to transact without the need for physical cash.

##Increase in Transaction Value

The adoption of the CBDC is not only limited to the number of eNaira wallets created, but also the value of transactions carried out with it. In 2021 alone, the value of transactions carried out on the platform has increased by a staggering 63%, totaling 22 billion naira ($48 million). This value is expected to continue to grow as more people make the switch to digital transactions.

##Benefits of the CBDC

The CBDC has several benefits to offer Nigerians, especially in the face of a cash shortage. Firstly, it provides a secure and safe medium of exchange that is resistant to fraud and counterfeits. Secondly, since it operates through electronic means, it eliminates the need for physical cash, reducing the cost of printing and handling cash. Thirdly, it provides a convenient mode of payment, as transactions can be carried out on the go through mobile devices without the need for bank queues and physical exchange of cash.

##Challenges to Adoption

Despite the growing popularity of the CBDC, there are still challenges faced in its adoption in Nigeria. Firstly, there is a large population that is not yet technologically inclined, which would make it difficult for them to adopt the digital platform. Secondly, there is still a lack of trust in digital platforms, due to the prevalence of cybercrime in the country. Addressing these challenges would be crucial in ensuring widespread adoption of the CBDC in Nigeria.

##Conclusion

The adoption of the CBDC in Nigeria is no doubt a significant development that holds promise for the country’s economic prospects, especially in the face of cash shortages. The eNaira wallets adoption and increasing transaction value show a shift towards digital transactions and more convenient modes of payment in the country. There is a need to address the challenges faced in its adoption to ensure that more Nigerians can take advantage of its benefits.

##FAQs

Q1. How do Nigerians access the eNaira wallets?
A: Nigerians can access eNaira wallets through authorized banks or mobile network operators.
Q2. Can the CBDC be used for international transactions?
A: Yes, the CBDC can be used for international transactions, but the recipient must be able to accept eNaira.
Q3. Is the CBDC only for individuals?
A: No, the CBDC can be used by individuals and businesses in Nigeria.
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