The federal government of Nigeria through the Central Bank of Nigeria (CBN) is currently in talks with a New York-based tech firm, to develop a new and improved system to manage the country’s digital currency, the eNaira.
According to sources familiar with the story, the CBN wants to develop its software for digital currency, so that it can keep full control of the effort, as it is currently discussing plans with R3, a New York-based technology firm.
The sources further disclosed that the world’s leading digital currency expert Bitt Inc. which had previously helped Nigeria issue its central bank digital currency in October 2021, revealed that a new partner won’t take over its job immediately, but would help the central bank meet its long-term aspiration to control the underlying technology.
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Bitt wrote in a statement, “We are aware that our partner, the CBN, works with various service providers to explore technical innovations for their digital infrastructure.” The company added that it continues to work closely with the Nigerian central bank and is “currently developing additional features and enhancements.”
It would be recalled that Nigeria became the first country in Africa and one of the first in the world to release a digital currency in October 2021, to deepen financial inclusion for Nigerians.
During the launch of the eNaira in a press release dated 23rd October 2021, the CBN disclosed that the launch of the eNaira is a ‘culmination of several years of research work’ done by it in advancing the boundaries of payments systems to make financial transactions easier and seamless for every strata of the society.
Meanwhile, ever since the launch of the digital currency, it has been followed by a low adoption rate as the project has struggled to gain traction among Nigerians.
A Bloomberg report in October 2022 revealed that the usage of the eNaira was just at a very low level of 0.5% of Nigeria’s 217 million population. Meanwhile, a huge percentage of the population is increasingly interested in cryptocurrencies.
The disappointing low adoption rate spurred the CBN to intensify efforts to raise awareness for the eNaira to increase the adoption rate, which saw them offer a 5% discount to drivers and passengers in the country.
Soon after, the CBN governor Godwin Emefiele announced that the eNaira project entered its second phase with an adoption target of eight million users. According to him, the CBDC had about 840,000 downloads, with about 270,000 active wallets.
He further added that there had been around 200,000 transactions worth 4 billion naira approximately $9.5 million at the time.
Meanwhile, many Nigerians have failed to see the difference between the government-backed eNaira and cryptocurrencies and thus have wondered about the rationale behind Government’s decision to stop banks from trading cryptos.