Three Years Later, eNaira Falls Short OF Expectations, Exposes Digital Currency Challenges

Countries like the Bahamas, Nigeria, and Jamaica have successfully launched their Central Bank Digital Currencies (CBDCs), albeit with varying adoption rates and success. According to the Atlantic Council, a US-based think tank, a CBDC is virtual currency issued and supported by a central bank.

Currently, 134 countries and currency unions, accounting for 98% of global GDP, are exploring CBDCs, a sharp increase from just 35 countries in May 2020. Of these, 66 countries are in advanced stages of development, pilot testing, or have already launched their digital currencies.

Nigeria became the first African nation to introduce a CBDC with the launch of the eNaira in October 2021. The digital currency, pegged to the Nigerian naira, was introduced by former President Muhammadu Buhari. Its main goal was to promote financial inclusion by integrating unbanked populations into the country’s financial system.

The Central Bank of Nigeria (CBN) highlighted several advantages of the eNaira, including reducing the cost of printing physical currency, creating a fast and reliable payment system, supporting the digital economy, simplifying cross-border payments, and boosting economic activities. It was also designed to improve the effectiveness of monetary policies, facilitate targeted social interventions, and streamline tax collection—all aimed at bolstering Nigeria’s economic growth.

A Centralized Alternative to Cryptocurrencies

The eNaira was launched as part of the CBN’s strategy to combat the use of cryptocurrencies, which were seen as volatile and anonymous. Unlike cryptocurrencies, the eNaira operates within a centralized system, allowing the CBN to monitor transactions, control wallet access, and regulate the purchasing power of holders.

In the early stages following its launch, the eNaira app experienced significant downloads, with over 589,000 downloads across iOS and Android stores by November 2021. The app averaged 20,000 downloads daily, and by January 2022, it had surpassed 694,000 downloads, processing over 35,000 transactions. By the end of that year, the CBN reported that the platform had processed transactions worth just under $10 million.

Despite the early surge in interest, adoption of the eNaira has been disappointingly slow. According to a July 2023 IMF report, only 0.5% of Nigerians had adopted the eNaira, with 98.5% of wallets remaining inactive a year after its launch.

More than three years later, adoption rates remain low, and the public’s perception of the digital currency has been largely negative. The IMF described the public’s adoption of the eNaira as “disappointingly low,” with social media users mocking the initiative using terms like “E-vanish,” “E-vaporate,” and “E-Dead,” reflecting its failure to gain traction.

Compounding the challenges, the eNaira mobile app was removed from the Google Play Store, though it remains available on the Apple Store. Additionally, the USSD code (*997#), designed to enable transactions for users without smartphones, has not been functional. The eNaira’s official social media accounts have also remained largely inactive, with the last post made on August 10, 2023.

IMF Report: Low Transaction Volume and Inactive Wallets

According to a May 2024 IMF Article IV consultation report, the number of eNaira wallets had grown to 13 million, though most remain inactive. Since its launch, only 854,512 transactions have been completed, primarily consumer-to-merchant transactions, totaling N29.3 billion. The report attributed the slow adoption to the CBN’s “phased approach,” which initially limited the digital currency to bank account holders and domestic transactions.

Development journalist Mayowa Tijani, who downloaded the eNaira app and funded his wallet shortly after its launch, told TheCable that despite the initial offer of waived transaction fees, the CBN failed to clearly communicate the unique benefits of using the eNaira over regular banking apps.