For a country like Nigeria that its currency – the naira –
was on a free fall, giving the people a digital fiat as an alternative to
cryptocurrency seemed like a solution.
However, the launch of the eNaira has done not much to save
the naira from losing value, mainly due to poor adoption. As of early this
year, the eNaira has recorded nearly 700,000 downloads, 165,000 consumer
wallets and 2800 merchant wallets. A very poor turnout compared with the number
of people who use cryptocurrency despite that it is prohibited in Nigeria.
Now the Central Bank of Nigeria (CBN) wants to introduce the
Unstructured Supplementary Service Data (USSD) code as part of steps to entice
more people to use the digital currency.
NAN reports that Kingsley Obiora, the CBN Deputy Governor
disclosed this at the IMF African Department Speakers Series held virtually on
Friday. Obiora said the introduction of the USSD code became necessary to
improve financial inclusion in the country and to ensure people without
smartphones could still transact on the eNaira platform.
“We have made serious progress in the last seven to eight
years because when the current governor resumed in 2014, one of the pillars of
his vision was to significantly improve financial inclusion.
“So at the time, we were at 48 per cent of our population
within the financial system and given several policies that he conceived and
implemented, we are almost at 70 per cent.
“That still leaves us with about 30 per cent of our
population out of the financial system and we believe the CBDC can help reduce
that number even more.
“A lot of people might not have smartphones but that is
essentially the next step of our improvement in the CBDC, to introduce the USSD
code, so those that do not have smartphones can still transact,” Obiora said.
The CBN deputy governor said that the barrier to entry on
the CBDC platform was low, which made it possible for everyone with a Bank
Verification Number (BVN) to be onboarded into the eNaira platform in a few
minutes.
Obiora said the value of the country’s digital payments grew
from 324 billion dollars in 2008 to about 2.4 trillion dollars presently,
adding that Nigerians were now used to digital payments.
”As you know, within the content we have one of the largest
Fintech companies, Futterwave, Paystack, etc,” the apex bank boss added.
He said that the CBDC had significant benefits for Nigeria,
which was why the CBN decided to introduce it.
Obiora listed the benefits to include rapid financial
inclusion, reducing the cost of processing cash, enabling direct welfare
payments to citizens, and reducing the informal economy.
Others are improving tax collection, boosting cross-border
trade and remittances, reducing the cost and improving the efficiency of
payments and just endearing economic growth in general.
He, however, listed some of the key risks to introducing the
CBDC including banking sector disintermediation, operational risks of knowing
that there is non-stop service, cyber security risks, internet disruptions and
financial literacy.
Obiora said that Nigeria was doing well based on a PwC
report, which showed that Nigeria was number one in terms of adoption, adding
that the CBN would keep growing and improving on the system.
Cryptocurrency remains a big subject yet to be addressed by
Nigeria’s financial regulator. Though the Securities and Exchange Commission
has outlined guidelines to regulate the entire Nigeria’s digital asset
ecosystem, the CBN is yet to come on board with the idea.
Obiora said cryptocurrency would not become part of the
country’s financial system for now because of the volatility that it could
create for the system.