Interest in Nigeria’s CBDC grows as cash shortages bite

The Central Bank of Nigeria’s decision to replace old notes with newer ones featuring higher denominations amid high inflation has led to cash shortages and a rise in transactions using CBDC. This is reported by Bloomberg.

Since October 2022, eNaira transaction volume jumped 63%, to NGN 22 billion (~$47.7 million), and the number of wallets opened rose more than twelvefold to 13 million. According to Godwin Emefiele, governor of the Central Bank of Nigeria.

The monetary reform helped reduce cash in circulation from 3.2 trillion NGN to 1 trillion NGN, with more than 10 billion eNaira issued (3.4 billion coins in circulation).

The growth of the CBDC user base has also been aided by government initiatives and social programs.

“eNaira has become the preferred channel for electronic payments for expanding access to financial services,” Emefiele explained.

In December 2022, Nigerian authorities imposed limits on withdrawals as part of efforts to promote cashless alternatives and expand CBDC use.

Earlier the IMF warned that the digital naira could pose risks of money laundering and financing of terrorism. The IMF’s experts saw such threats in cross-border CBDC use.