IMF applauds Nigeria’s CBDC

The International Monetary Fund (IMF) has published a report on Nigeria’s central-bank digital currency (CBDC). Its authors praised the authorities for their work.

The country launched eNaira in October 2021. According to the IMF, only 1.5% of wallets were active every week over the past 12 months. During the 12-month period, 802,000 transactions were conducted.

Less than 1% of open bank accounts in the country have a linked digital wallet for the CBDC.

“As with any network-based product with similar characteristics, such as credit cards, overcoming the initial hurdle of low take-up requires a combination of well-considered strategies and luck,” the IMF said.

According to the document, Nigeria has successfully carried out the initial stages of integrating the technology. However, the country has yet to provide access to the service for non-financial institutions, and the money-transfers process remains too complex.

The IMF recommended that the country engage with operators of electronic money services. In the Fund’s view, such a move would help broaden the adoption of the eNaira.

It also faces issues in the global market, as overseas counterparties cannot access the assets. The report’s authors proposed creating suitable wallets for international money-transfer operators or resorting to intermediaries.

Earlier the IMF warned that the digital naira could pose money-laundering and terrorist-financing risks. The organisation’s experts saw similar threats in cross-border use of the asset.

In December 2022, Nigerian authorities introduced limits on cash withdrawals as part of promoting cashless alternatives and expanding the use of the CBDC.

In March 2023, it emerged that the Central Bank of Nigeria’s decision to replace old notes amid high inflation led to cash shortages and an increase in eNaira transactions.