Nigeria improves CBDC as crypto restrictions hold back the country’s fintech industry

The central bank of Nigeria has elevated its eNaira to keep the country away from crypto through a UN report stating that restrictions on digital currencies are holding back the nation’s financial sector.

The Central Bank of Nigeria (CBN) is moving ahead with plans to promote the country’s central bank digital currency (CBDC) to be used on a broader range of goods and services. It is also maintaining strict crypto restrictions that immobilise the country’s fintech sector.

Bariboloka Koyor, the CBN Branch Controller, spoke at a campaign on May 9, targeting to “sensitize” businesses to the eNaira at a market in the country’s most populous city of Lagos. Conferring to a report from Vanguard. Koyor stated:

“Starting from next week, there is going to be an upgrade on the eNaira speed wallet app that will allow you to do transactions such as paying for DSTV or electric bills or even paying for flight tickets.”

Koyor confirmed that the upgrade was launched to make onboarding easier. He advertises about its wallet that it had no charges and it is even faster than internet banking. He further said that in the future, the only way to receive financial assistance from the government would be through the eNaira. He stresses the benefits of the first adoption.

“This is a project that the CBN has rolled out to reach every Nigerian in terms of financial inclusion and in terms of efficiency, reliability, and safety of banking transactions so that we can do banking transactions very easily and safely and the people in Nigeria can enjoy the benefit of the eNaira.”

The price of the naira has fallen by over 209% in the past six years which has pushed Nigerians to accept crypto in crowds. According to a report published in April, from the KuCoin crypto exchange, it highlighted that around 33.4 million Nigerians owned or traded cryptocurrencies in the last six months.

Restrictions on crypto trading in the country tightened from October 2021 after the introduction of the eNaira . Though the CBN banned banks from servicing crypto exchanges in February of the same year, the real enforcement happened in November 2021 when the accounts of two crypto traders were frozen by the order of the CBN.

This restriction led to commercial banks in the country tracking their customer’s accounts to look for any sign of cryptocurrency trading which could cause accounts for fintech businesses to be highlighted.

A report jointly published by the Secretary Generals of the Organisation for Economic Co-Operation and Development (OECD) and the United Nations (UN) in April confirmed the restrictions on trading that is a cause for concern.  

Related: The Central African Republic reportedly passes a bill to regulate crypto use,

The report engrossed in the urbanisation of Africa and said young Africans working in the tech sector “creating apps or trading digital currencies” were at risk from subjective government policies. It singled out Nigeria as an example, stating:

“The restrictions on cryptocurrency transactions…in Nigeria have crippled foreign direct investment in the fintech industry and negatively impacted millions of young Nigerians who earn a living from the sector. Many have found a way, however, to lawfully bypass these restrictions and continue the business, effectively denying Nigeria the taxes and transaction fees that would otherwise come into the system”

There is no chance of CBDC adoption slowing down, recent research found that 80% of central banks were considering a CBDC. Tanzanian officials said that their CBDC plans are fast-tracking, as reported on May 10.

In a Bloomberg interview, the Bank of Tanzania Governor Florens Luoga said the country sent administrators to countries with CBDC experience, including Nigeria, to learn from them directly mentioning concerns of “cryptocurrency speculators”.