Despite the Nigerian government’s ambitious launch of the Central Bank Digital Currency, the eNaira, the adoption rate has remained low, making up less than 1% of the total currency in circulation as of March 2024.
According to data from the quarterly statistical bulletin of the Central Bank of Nigeria (CBN) for the first quarter of 2024, out of N3.87 trillion currency in circulation by March 2024, eNaira made up N13.98 billion.
This revealed that only about 0.36% of currency in circulation in the country is in the CBDC eNaira. However, the amount of data available for circulation has surged by 1,896% from N700.75 million recorded in October 2021. Recall that the CBN in February 2024, disclosed that the value of eNaira in circulation rose by 302 percent in Nine months to N10.26 billion at the end of September 2023.
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Analysis of the CBN data on Currency in Circulation from the quarterly statistical bulletin for the third quarter (Q3) 2023, revealed that the value of eNaira in circulation rose sharply by 302 percent in nine months to N10.26 billion at the end of September 30th, 2023, 9M’23 from N2.55 billion at the end of 2022, 9M’22.
The increase represents 131 percentage points higher than the 171 percent increase record in the same period of 2022. Further analysis showed that eNaira in circulation recorded quarter-on-quarter, growth of 90 percent, 48 percent, and 43 percent in Q1’23, Q2’23, and Q3’23 respectively.
Notably, the Apex bank disclosed that the surge in eNaira adoption was driven by transactions via the USD channels. The volume and value of eNaira transactions via the USD channel are reported to have risen by 92.95 percent year-on-year, (YoY) and 120.93 percent in 9M’23 respectively, while the number of merchants accepting eNaira also rose 11.97 percent during the same period.
However, the eNaira’s recent report of making up less than 1% of the total currency in circulation as of March 2024, almost three years since it was launched, highlights the slow adoption of the digital currency as a significant portion of the Nigerian population remains reluctant to adopt the currency.
Launched by the Central Bank of Nigeria (CBN) in October 2021, the eNaira was envisioned as a digital alternative to physical cash, aiming to enhance financial inclusion, reduce transaction costs, and improve the efficiency of the monetary system. The digital currency operates alongside the traditional naira and is accessible through a dedicated mobile app.
The CBN has been actively promoting the eNaira through various initiatives. These include partnerships with financial institutions, merchant incentives, and public awareness campaigns. Despite these efforts, many Nigerians still prefer using cash for daily transactions due to its familiarity and widespread acceptance.
While eNaira holds promise for transforming Nigeria’s financial landscape, its current adoption rate highlights the need for continued efforts to address the barriers hindering its widespread acceptance. There is a need for continued efforts to educate the public, improve digital infrastructure, and address security concerns about the eNaira, towards driving the success of the digital currency.