The world is going digital and many countries all around are seeking to lead the race. Some countries amidst these top contenders took advantage of starting early. Nigeria is among such players who initiated early and where many countries were only thinking, it launched its own CBDC—eNaira—in 2021. The authorities are making efforts to increase the use of Nigerian digital currency.
CBDC Adoption Needs Immediate Push
Recently the African country announced to put up a cap over the withdrawal amount of cash for both individuals as well as businesses. This is intended to push the use of the central bank digital currency of Nigeria—eNaira. The action came in the wake of the country’s efforts to promote a cashless economy.
According to a circular of the Central Bank of Nigeria, individuals and businesses in Nigeria would now be able to withdraw only a limited amount of cash using ATMs. For individuals, the cap is at ₦100,000, or $225 and businesses are obligated to withdraw ₦500,00, equivalent to $1,125 per week.
Moreover, the daily cash withdrawal limit for an individual and transactions at point-of-sale (PoS) terminals is at ₦20,000 or $45. The withdrawal over the limit, however, will be possible with the surcharge of 5% for individuals and 10% for business to pay over the transactions.
Nigerian CBDC’s Insignificant Reach
Earlier the limitation of cash withdrawal was set at ₦150,000 or $338 for individuals and for businesses were capped at ₦500,000 or $1,128.
eNaira adoption has been slowed down and constantly dropping since its launch. The Central Bank reported to find it tough to make the citizens understand and use the digital currency. Reports suggest that within a year of its launch, Nigerian CBDC has only made its reach to 0.5% of population.
Harun Mustafa, Director of Banking Supervision said that customers need to be encouraged to use alternative payment methods including internet banking, mobile banking, cards/PoS, eNaira, etc.
In 2012, Nigeria implemented its cash-less policy, arguing that doing so would improve the country’s monetary policy, decrease the cost of banking services, and increase the efficiency of its payment system.
Godwin Emefiele, the governor of Nigeria’s central bank, noted on October 26 that 85% of all Naira in circulation was held outside of banks and that as a result, new banknotes would be issued in an effort to promote the transition to digital payments.
Nigeria is one of 11 nations that have fully implemented a CBDC, and 15 other nations have started pilot programs. India is expected to join the group later this month, according to a CBDC tracker from the American think tank Atlantic Council..