- A newly proposed bill wants to make it legal to use digital currencies in Nigeria to stay in line with recent innovations.
- The adoption of eNaira CBDC in Nigeria has been tepid since a majority of the population still likes to do cash transactions.
The African nation of Nigeria is making some serious efforts to push the use of digital currencies in the country. Earlier this month on December 6, the Central Bank of Nigeria announced a cap on cash withdrawals in a move towards a cashless society.
Last week, Babangida Ibrahim, the chairman of the House of Representatives Committee on Capital Markets and Institutions disclosed that they would soon pass a bill to allow the use of digital currencies in Nigeria. This could further fuel the use of public cryptocurrencies like Bitcoin.
For this, lawmakers need to sign the Investments and Securities Act, 2007 (Amendment) Bill and pass it into law. This would allow Nigeria’s “SEC” to recognize digital assets as capital for investments. Besides, the proposed law will also define the regulatory roles for the SEC and the Central Bank of Nigeria.
During an interview with a local news publication PUNCH last Saturday, Ibrahim said that Nigeria needs to keep pace with global economic innovations. He added:
We need an efficient and vibrant capital market in Nigeria. For us to do that, we have to be up to date global practices. In recent time, there are a lot of changes within the capital market, especially with the introduction of digital currencies, commodity exchanges and so many other things that are essential, that need to be captured in the new Act. Like I said, it is better to talk about this after consideration of the reports.
Nigeria Pushing for Its CBDC eNaira
The recent decision by Nigeria to phase out cash from its financial system goes in hand with the country’s plans to encourage the adoption of central bank digital currency (CBDC), eNaira. The Central Bank of Nigeria (CBN) launched eNaira last October 2021 and became the second bank to launch its CBDC.
The eNaira is a blockchain-based CBDC but unlike other cryptocurrencies, it is entirely controlled and overseen by Nigeria’s central bank. The Central Bank of Nigeria said that the goal of eNaira is to promote further financial inclusion.
Users can access eNaira through their respective banking apps as well as via USSD, a “quick code” available on GSM cellphones to communicate with the network’s computers.
Nigeria’s central bank said that its new policy on digital currency was in line with its cashless policy. It also added that “customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira etc.) to conduct their banking transactions”.
However, the adoption of eNaira has been tepid as the Nigerian economy runs the majority on cash. Ikemesit Effiong, head of research at Lagos-based socio-economic research firm SBM Intelligence, said that the cashless policy might encourage people in hoarding cash and also hurt those it is supposed to benefit the most. Effiong added:
[thrive_leads id="228374"]The new policy, while hailed as a path to increased adoption of cashless transactions, is likely to turn off customers from utilizing formal banking structures. The thriving agency banking business, where POS (point of sale) kiosks facilitate cash withdrawals, will suffer as the new policy wipes off most of that business.
