With ₦4bn transactions in 10 months, eNaira is performing less than expected

The Central Bank of Nigeria (CBN) announced last week at the grand finale of the eNaira Hackathon, that transactions on its digital fiat, eNaira have hit ₦4 billion since its launch in October 2021.

The CBN Governor,  Godwin Emefiele said, “Since the launch of this great initiative, the eNaira has reached 840,000 downloads, with about 270,000 active wallets comprising over 252,000 consumer wallets and 17,000 merchant wallets.

 “In addition, volume and value of transactions on the platform have been remarkable, reaching above 200,000 and ₦4 billion, respectively.”

Emefiele disclosed that despite the successes recorded on the initiative, the CBN, in collaboration with private sector operators, has started the second phase.

He said, “Notwithstanding this appreciable progress, the second phase of the project has begun, and it is intended to drive financial inclusion by onboarding unbanked and underserved users leveraging offline channels.

“Hence, greater success is envisioned for the project with phase two expected to deliver more gains with a target of about 8,000,000 active users based on estimations using the diffusion of innovation model.”

CBN explains the course of the eNaira

The CBN governor said that eNaira would make a significant positive difference to Nigeria and Nigerians as it would ease their participation in the global digital economy.

Specifically, the eNaira is expected to enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payments ecosystem, improve availability and usability of central bank money, facilitate diaspora remittances, reduce the cost of processing cash, and reduce cost and improve the efficiency of cross-border payment among others.

Godwin Emefiele

Read also: E-payment transactions grow by 40% to ₦205.4trn in H1 2022- NIBSS report

He added that “eNaira was developed to provide Nigerians with a cheap, safe and trusted means of payment. Unlike offline payments channels like agent networks, USSD, wearables, cards, and near-field communication technology, the eNaira would give access to financial services to underserved and unbanked population segments.

“Innovative products and services built on the eNaira would enhance Nigerians’ participation in the digital economy and promote further development of a burgeoning Fintech ecosystem.”

Emefiele noted that though there has been a global recognition of the feat so far, the journey is iterative and requires cutting-edge innovation to sustain the vision and achieve the set policy objectives.

“It is important to note that ‘enabling private sector innovation’ is one of the three foundational principles of Central bank Digital Currency (CBDC). Thus, the hackathon is neither a coincidence nor an accident but rather another forward leap by the CBN in the implementation of eNaira, to ensure all Nigerians receive the full benefits of a Central bank Digital Currency (CBDC).

“The Hackathon is an initiative that creates a collaborative environment for experts with a diverse set of skills to drive sustained innovation geared towards making the eNaira the pinnacle for digital financial services and the gateway to the Digital Economy,” he said.

How far has the eNaira gone?

In February, it was reported that only 10% of digital currency transactions were transferred between people-to-people (p2p) and people-to-merchants (p2m), indicating that Nigerians were not enthusiastic about using the eNaira platform.

90% of transactions across eNaira wallets were from persons to banks and vice-versa.

Earlier than that, barely two weeks after the launch of the eNaira, the CBN disclosed that the CBDC successfully made 12,500 transactions worth ₦46.3 million. The CBN mentioned that the numbers indicated optimism toward the digital currency, but the eNaira received bad reviews and was taken off Playstore after it was launched.

You would not expect all Nigerians to ditch their use of other fintech platforms to download the Wallet.

It presently has 270,000 active wallets comprising over 252,000 consumer wallets and 17,000 merchant wallets indicate 1.35 transactions per active wallet – considering the 200,000 transactions – which means that the eNaira is far from achieving a commendable feat.

For instance, President Muhammadu Buhari said, during its launch, that the eNaira and its underlying blockchain technology can increase Nigeria’s Gross Domestic Product (GDP) by $29 billion over the next ten years.

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 US$29 billion over the next 10 years.

President Muhammadu Buhari

At the launch, the CBN governor said since the eNaira platform went live, there has been overwhelming interest and encouraging response from Nigerians and other parties across the world with over 2.5 million daily visits to the website.

He said, “33 banks are fully integrated and live on the platform, ₦500 million has been successfully minted by the Bank, ₦200 million has been issued to financial institutions, over 2,000 customers have been onboarded, and over 120 merchants have successfully registered on the eNaira platform.”

But, the adoption rate and transaction rate over this ten-month period express scepticism from Nigerians. Besides, it is still unclear how cross-border transactions will work with eNaira.

In contrast to that submission, the CBN said, in May, that central banks across Africa and other parts of the world are trying to study Nigeria’s eNaira project.

We feel delighted about what we are doing in the area of the Central Bank Digital Currency, CBDC. What we are doing in the area of eNaira is attracting the interest of different countries worldwide.

Godwin Emefiele

He noted that the CBN had been receiving a lot of inquiries from central banks in Africa and different parts of the world who were trying to understand what the bank was doing.

And in June, the International Monetary Fund (IMF) reported that some other African countries are exploring the use of digital currencies to enhance payment systems, following Nigeria’s October introduction of the eNaira.

Nigeria was the second country after the Bahamas to roll out a CBDC.

Going forward

Phase II may leave room for a greater adoption rate as it is supposedly focused on the unbanked who can sign up to use eNaira by dialling a USSD code – *997# – the CBN governor said, adding that the target user base is eight million.

Aside from transacting, Emefiele said Nigerians could also open an eNaira wallet on any phone of their choice through the designated USSD code.

“Nigerians, both banked and unbanked, will be able to open an eNaira wallet and conduct transactions by simply dialling *997# from their phones.

“Shortly after this, both merchants and consumers with bank accounts can use the NIBSS Instant Payment (NIP) to transfer and receive eNaira to any bank account.

“This will further deepen the integration of the eNaira with the existing national payment infrastructure.”

The CBN will increase the level of Financial Inclusion in the Country because just like the Naira, the eNaira is expected to be accessible to all Nigerians. And would provide more possibilities to bring in the unbanked into the digital economy.