Nigeria’s e-naira fails but Ghana sees promise for e-cedi
Bola TInubu — Nigeria’s new president

Nigeria’s e-naira fails but Ghana sees promise for e-cedi

The International Monetary Fund (IMF) has revealed that 98.5 per cent of Nigeria’s Central Bank digital currency, e-naira wallets have not been used even once, two years after its launch.

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There are about 14 million e-naira wallets in existence, with over ₦500 million worth of e-naira ($1.21 million) already minted. The numbers by the IMF show that only about 1.5 per cent of downloaded wallets have been used, with the average value per transaction being ₦63,000.

According to the IMF, the total number of retail e-naira wallets is about 860,000, which is equivalent to just 0.8 per cent of Nigeria’s active bank accounts.

The digital currency, which the Central Bank of Nigeria (CBN) Governor Godwin Emeifele said would grow the Gross Domestic Product (GDP) by $29 billion and improve financial inclusion, hasn’t seen much inclusion in the financial habits of Nigerians as a large number of the population has complained about it being impractical and not having any relevant use, different from already existing stores of value.

The IMF ,therefore, held the view that these low adoption rates can only be broken by a coordinated policy drive to break it.

“The e-naira’s potential in financial inclusion requires a strategy to set the right relationship with mobile money, given the former’s potential to either complement or substitute the latter,” it said.

Nigeria was the first African country to launch an official digital currency, which came after the central bank banned all crypto activities in the country, propping the e-naira as an alternative.

So far, the CBN has partly blamed banks for the low adoption rates, claiming that traditional banks are apathetic as they do not want Nigerians to abandon their bank accounts for e-naira wallets.

The Nigeria e-naira model is account-based because at the time of its launch, there were no mobile money operators in that country. Mobile money only took off in Nigeria later last year with banking a payment service licenses to MTN, Airtel and a few others.

Nigeria’s e-naira is ,therefore, failing largely because it was directly issued by the central bank with no real benefits to banks and Fintech community, unlike Ghana’s e-cedi, which is both bank and FinTech led, as the central bank has said it will ride on existing infrastructure to drive e-cedi adoption.

The e-Naira is ,however, likely to start doing better soon, as it pivots from a strictly bank account model to the token/value model like the e-cedi, involving mobile money operators.

Ghana e-cedi 

Meanwhile, in Ghana, the e-cedi field test is completed and the central bank reports that it was very successful as it showed promise for a boost in financial inclusion when fully rolled out.

The pilot was mainly between selected customers of three institutions – Calbank (bank), IT Consortium (fintech) and Vodafone (telco) and it was rolled out in selected communities with some positive feedback.

The central bank, at a recent Monetary Policy Committee (MPC) press conference said it was working to stabilise the cedi to a certain level before rolling out the e-cedi fully.

When it goes fully public, the offline version in particular, is expected to boost financial inclusion because it does not require internet connectivity to work.

Whereas Ghana is yet to fully rollout the e-cedi, other countries, including even developed economies are learning from Ghana and are fashioning their own CBDCs in line with Ghana’s e-cedi model, particularly the offline version.

But the e-cedi is also being viewed as not too different from mobile money and other digital wallets hugely dominant in Ghana right now, particularly as it relates to the end user.

There has been some debate around whether e-cedi wallets would also attract interest like mobile money wallets do, and the argument from banks is that money transferred into e-cedi wallets from bank accounts, is no more available to the bank for investment so it cannot attract interest. Moreover, e-cedi is just like cash in one’s pocket, which does not attract interest.

That feature of the e-cedi, to consumer activists, makes mobile money more advantageous than e-cedi and poses a threat to e-cedi adoption when fully implemented.

Meanwhile, technical work on the e-cedi is still ongoing to ensure that by the time it is implemented, it will be widely adopted by consumers due to its obvious advantages.

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