The Central Bank of Nigeria (CBN) is pressing ahead with plans to upgrade the country’s digital currency (CBDC) so that it can be used for a wider range of goods and services. It is also maintaining the harsh restrictions on cryptocurrencies that are crippling the country’s fintech sector.
The comptroller of the CBN branch, Bariboloka Koyor, spoke in a campaign aimed at “raising awareness” of companies about the eNaira at a market in Lagos, the country’s most populous city, on Monday, according to a Vanguard report. Koyor stated:
“Starting next week, there will be an update to the eNaira fast wallet app that will allow transactions such as paying for DSTV or electricity bills or even paying for airline tickets.”
Koyor said the update was released to make it easier to onboard CBDC, and then touted his wallet, which had no fees and was faster than internet banking. He added that, in the future, the eNaira will be the only way to receive financial aid from the government, highlighting the advantages of its early adoption.:
“This is a project that the CBN has launched to reach all Nigerians in terms of financial inclusion and in terms of efficiency, reliability and security of banking transactions, so that we can do banking transactions very easily and safely. and that people in Nigeria can enjoy the benefits of eNaira.”
The value of the naira has fallen by more than 209% in the last six years, leading Nigerians to adopt cryptocurrencies en masse. An April report from cryptocurrency exchange KuCoin highlighted that some 33.4 million Nigerians owned or traded cryptocurrencies in the past six months.
Restrictions on cryptocurrency trading in the country tightened after the launch of eNaira in October 2021. The Central Bank of Nigeria banned banks from servicing cryptocurrency exchanges in February of the same year, but the actual enforcement came in November 2021, when the Central Bank of Nigeria ordered the freezing of the accounts of two cryptocurrency traders. cryptocurrencies.
This crackdown prompted the country’s commercial banks to track their customers’ accountslooking for signs of cryptocurrency trading that could get fintech companies’ accounts flagged.
Trade restrictions were a cause for concern in an April report released jointly by the Secretaries-General of the Organization for Economic Co-operation and Development (OECD) and the United Nations (UN)..
The report focused on the urbanization of Africa and stated that young Africans working in the tech sector “creating apps or trading digital currencies” were at risk of arbitrary government policies.. He pointed to Nigeria as an example, stating:
“Restrictions on cryptocurrency transactions […] in Nigeria have crippled foreign direct investment in the fintech industry and negatively affected millions of young Nigerians who make a living in the sector. However, many have found a way to legally circumvent these restrictions and continue in business, effectively denying Nigeria the taxes and transaction fees that would otherwise enter the system.”
There are no signs that the adoption of CBDCs will slow down, as recent research revealed that 80% of central banks were considering adopting a CBDC.. On Tuesday, Tanzanian officials claimed that the CBDC’s plans are accelerating.
In an interview with Bloomberg, Bank of Tanzania Governor Florens Luoga said the country sent officials to countries with CBDC experience, including Nigeria, to learn from them directly, citing concerns from “cryptocurrency speculators”.
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