The digital currency and the blockchain technology it uses can foster economic growth and increase the GDP of Africa’s biggest economy by $29 billion over the next 10 years. Nigeria’s Central Bank (CBN said that around 500 million eNaira (1.21 million) have already been minted in lieu of the digital currency going live. The eNaira’s launch marks a major step forward in the evolution of money and the CBN is committed to ensuring that the eNaira, like the physical Naira, is accessible to everyone. CBDCs are rapidly gaining popularity worldwide, and Nigeria is the first African country to officially launch a sovereign-backed digital currency pilot. With a population of 211 million, Nigeria’s CBDC trial now becomes the second largest behind China’s digital yuan. On top of that, over 62 percent of Nigerians are aged 24 or under, making the eNaira available to a largely digitally native population. Development of the eNaira was carried out by fintech company Bitt, whose Digital Currency Management System is also behind the East Caribbean Central Bank’s digital currency DCash.
Pegged to fiat currencies and backed by a country’s monetary reserves, CBDCs are emerging as the path for governments to co-opt the momentum that has been building around digital assets, principally as an answer to the popularity of cryptocurrencies like Bitcoin, which are decentralized and outside the remit of regulatory oversight. A similar story has played out in Nigeria, where the government and central bank struggled with the rise of cryptocurrency in the country. Nigeria has been one of the leading markets for digital currencies, ranking sixth in terms of cryptocurrency adoption in the world. It is the largest market for global crypto trading platform Paxful, which has 1.5 million Nigerian users out of its 7 million users worldwide. Aside from wealth creation, the popularity of Bitcoin in Nigeria was driven as a hedge against the naira’s inflation. The currency has been devalued twice and is worth 12.5 percent less since the onset of the pandemic. Using the blockchain ledger, the eNaira will be able to eliminate the need for third parties and contribute to efficient and low-cost transactions, as consumers gain access to low-risk and reliable payment options.