Nigeria’s central bank has upgraded its eNaira to steer the country away from crypto even after a UN report stated that restrictions on digital currencies are stifling the nation’s fintech sector.
The Central Bank of Nigeria (CBN) is moving ahead with plans to upgrade the country’s central bank digital currency (CBDC) to be used on a wider range of goods and services. It is also maintaining harsh crypto restrictions that cripple the country’s fintech sector.
The CBN Branch Controller Bariboloka Koyor spoke at a campaign aiming to “sensitize” businesses to the eNaira at a market in the country’s most populous city of Lagos on May 9 according to a report from Vanguard. Koyor stated:
Koyor said the upgrade was launched to make onboarding easier, touting its wallet that had no charges and was faster than internet banking. He added that in the future, the eNaira will be the only way to receive financial assistance from the government, stressing the advantages of early adoption.
The value of the naira has fallen by over 209% in the past six years which has pushed Nigerians to adopt crypto in droves. An April report from the KuCoin crypto exchange highlighted that around 33.4 million Nigerians owned or traded cryptocurrencies in the last six months.
Restrictions on crypto trading in the country tightened after the launch of the eNaira in October 2021. The CBN banned banks from servicing crypto exchanges in February of the same year but real enforcement happened in November 2021 when the CBN ordered the accounts of two crypto traders to be frozen.
This crackdown led to commercial banks in the country tracking their customer’s accounts looking for signs of cryptocurrency trading which could cause accounts for fintech businesses to be flagged.
The restrictions on trading were cause for concern in an April report jointly published by the Secretary Generals of the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN).
The report focused on the urbanization of Africa and said young Africans working in the tech sector “creating apps or trading digital currencies” were at risk from arbitrary government policies. It singled out Nigeria as an example, stating:
The Bank of Tanzania Governor Florens Luoga said in a Bloomberg interview that the country sent officials to countries with CBDC experience, including Nigeria, to learn from them directly citing concerns of “cryptocurrency speculators”.