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Nigeria launched its Central Bank Digital Currency, the eNaira, in October 2021, becoming the first African country to do so.
The Central Bank of Nigeria has announced its readiness to expand the technology behind its eNaira project to reach more people. The Governor of the apex bank, Godwin Emefiele, announced this while speaking at the Grand Finale of the eNaira Hackathon in Abuja.
The Hackathon, co-sponsored by the Central Bank of Nigeria and the Africa Fintech Foundry, saw ten startups emerge as winners. According to Daniel Awe, Head of the Africa Fintech Foundry, the eNaira Hackathon platform will be merged with the existing eNaira platform to improve its functionality.
Nigeria launched its Central Bank Digital Currency, the eNaira, in October 2021, becoming the first African country to do so. According to the project website, the eNaira will help facilitate international remittances and FX exchange. It will also help startups and medium-scale businesses upscale and create innovative products.
Since its launch, the CBDC app has had nearly a million downloads and 270,000 active wallets. Using the eNaira, consumers can pay for utility and other services. Emefiele noted that about 200,000 transactions had been performed using the CBDC, amounting to about $9.5 million.
How the eNaira Will Help Reach the Unbanked
According to Emefiele, launching the CBDC is a journey rather than a single event. He said: “We don’t have a choice but to live with the fact that we are now in a digital economy, in a digital space, where the user[s] of cash will dissipate almost to zero.”
Emefiele noted the second phase will drive financial inclusion among the unbanked and underserved users. The project hopes to onboard 8 million active users in the second phase. The apex bank will incorporate Unstructured Supplementary Service Data (USSD) to facilitate this.
Using the USSD, users will create eNaira wallets from their mobile phones by dialing a four-digit code. It won’t matter whether or not they have a bank account. Beyond this, users with bank accounts will be able to transfer between bank accounts using the Nigeria Inter-Bank Settlement System (NIPS) instant payment system.
Despite the ban on cryptocurrencies in the country, the eNaira faces competition from them. According to a 2022 Kucoin report, about 33.4 million Nigerians own or have traded cryptocurrencies recently.