Remember we announced 2 months ago that Nigeria’s apex bank, the Central Bank of Nigeria (CBN) plans to introduce its own digital currency? Well, sources indicate that the bank is planning to launch the currency on October 1st, as part of the country’s independence anniversary celebration.
This follows a meeting with its stakeholders to outline its digital currency initiative via a private webinar held today. Nairametrics reports that the pilot scheme will be launched in October.
CBN’s director of IT, Rakiya Mohammed, revealed to stakeholders that the bank had been conducting internal research around its proposed currency since 2017. She confirmed that the apex bank will conduct a proof of concept before the end of this year.
The director also revealed that the project has been tagged project GIANT. She also disclosed that it will be based on the Hyperledger Fabric Blockchain, a multi-project open source collaborative effort created to advance cross-industry blockchain technologies. It will be hosted by The Linux Foundation.
The development follows months of speculation on the bank’s plans even as it has sustained a ruthless clampdown on crypto startups and investors using a series of restrictive regulations.
Recall that Technext had reported that the Founder of Bitcoin Nigeria User Group, Chimezie Chuta had predicted that the CBN was already planning to introduce its own digital currency. Chimezie was also a member of the committee that drafted the SEC regulations on cryptocurrencies.
If this goes as planned, Nigeria could become the first African country to launch a Central Bank Digital Currency (CBDC). The country is in a tight race with South Africa as the South African Reserve Bank is already exploring the feasibility of launching a digital Rand (ZAR) which can be used for general retail purposes by consumers in the country.
Similarly, Nigeria will become a likely third in the entire globe to have a digital currency. As it stands, only two countries – the Bahamas and China, have officially launched digital fiat currency. The Bahamas issued its sand dollar in 2020 and the People’s Bank of China then began issuing its digital yuan in April 2021.
Other countries including Sweden, Norway, Japan, Indonesia and South Korea have announced digital currency trials.
The CBN has said that the benefits of the digital currency include macro-economic management, economic growth, cross border trade facilitation, financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement and targeted social intervention.
Industry players and analysts believe that the hopes of the CBN may be far-fetched as factors such as cash dominance, cybersecurity risks and low internet penetration present significant challenges with no aggressive plan to scale them in view.
One could only indeed hope that the CBN has thoroughly weighed its options.