Nigeria becomes the first African country to offer digital money to its citizens. The country has introduced eNaira, the digital counterpart of Naira, to cut transaction costs and boost the financial system.
The central bank of Nigeria has started the issuance of digital currency in the country. The currency will be called eNaira.
At the launch in Abuja, the Capital of Nigeria, President Muhammadu Buhari said that the country is one of the first in the world to introduce a digital currency for its citizens. He also mentioned the economic benefits of such a step.
The adoption of the central bank digital currency and its underlying technology, called blockchain, can increase Nigeria’s gross domestic product by $29 billion over the next 10 years.
Earlier in February, the Central bank of Nigeria struck a ban on transactions of cryptocurrencies by financial institutions.
eNaira platform has a growing popularity among Nigerians. Since its launch, there have been more than 2.5 million visits daily on sie. There are 33 banks integrated into the platform. So far $1.2 million worth of Naira has been minted. Moreover, there are 2,000 customers on board.
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eNaira is a CBDC or Central bank digital currency. CBDCs are different from cryptocurrencies like Bitcoin and Ethereum in the sense that the latter are not tied to any fiat asset. eNaira on the other hand is completely dependent on physical Naira. With the Physical Naira losing value, eNaira will also plunge in value.
Digital currencies are, however, a great way of boosting cross-border trade. These will help in optimizing the transaction speed.
Nigeria has been the top user of cryptocurrencies in recent years. One of the reasons for the government to introduce its own digital currency was financial inclusion. President Buhari said that Digital Money can also help in moving “many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country.”