Central Bank Digital Currency: The eNaira Casestudy

Central Bank Digital Currency: The eNaira Case study

The emergence of stable coins had led to countries starting research on how they could apply cryptography and blockchain to create a digital version of their currencies. This type of centralised cryptocurrencies is called Central Bank Digital Currencies.
China and Nigeria have launched Digital Yuan and eNaira respectively. It is undeniable that stable coins have some great benefits such as;

  • Cost effectiveness of transaction

  • Enables efficient cross border transaction

  • Promotes international business transaction

  • Make finalizations of transaction faster than the traditional fintech system

What can you say is the benefit of eNaira and Digital Yuan since their creation.
I found a post that mentioned eNaira but not much has been discussed about it. Here is the link.

What is your take on the value of CBDC?


As a Nigerian, I still believe that Nigeria’s central bank digital currency (CBDC) is not being well received by the country’s knowledgeable crypto community.
Less than 0.5% of Nigeria’s 217 million people, according to a Bloomberg article, are using the eNaira, the country’s official digital currency, a year after it was introduced.
Despite the fact Nigeria being ranked 11th globally and first in Africa for crypto adoption by Chainalysis, 35% of Nigerians between the ages of 18 and 60 reported owning or trading cryptocurrencies this year, according to a KuCoin research carried out.
Additionally, the naira has lost value almost six times since 2015, and economists predict a further 20% loss in value next year as the economy is further hampered by soaring inflation. As a result, many Nigerians may find it difficult to support the creation of a CBDC.Since its debut in October of last year, Nigeria’s central bank’s digital currency (CBDC), the eNaira, has been utilized to transact business totaling 4 billion naira ($9.3 million) according to the data released by central bank of Nigeria.
For the enaira, if the idea was well implemented and there was a wide adoption by Nigerians, I believe that the following would have been achieved which were the reasons why Nigerian government launched the digital currency:
1.encourage and aid financial inclusion
2.allowing for direct welfare payments to citizens
3.encourage remittances from the diaspora.
4.increase the usage and availability of Central Bank currency.
5.cut back on the price of processing cash.
6.Boost tax revenue and collection.
7.encourage a dependable payment system.
8.increase the effectiveness of international payments.
The plan was to make Peer-to-peer payments made possible through the launch of the eNaira, eliminating the need for intermediaries like financial institutions or “middle men.”
Leading this process might initiate a regional monetary union because Nigeria has the largest population on the continent. The issue of the inconvertibility of African currencies could be resolved if central bank digital currency systems could cooperate across the continent. Intraregional trade, which has been difficult to establish in Africa, might benefit from this. The successful rollout of the eNaira could be a step toward regional monetary union in Africa and possibly a regional central bank digital currency now that the African Continental Free Trade Agreement is in place.


Your comment and points highlighted are rather commendable. However, i think the major reason why the eNaira project fail is due to the fact that people are moving their value from naira to dollars. Others are moving from dollars to stable coins such as USDT and BUSD. The business case of saving and transacting in stable coin pegged to hard currencies is stronger than the business case of eNaira pegged to falling currency.


I agree with your submission but don’t forget that the reason people are now moving their money to stable coins like usdt and also Saving in dollars was as a result of fall in naira which was I stated in my previous comment. The lack of trust of Nigerians in the enaira and fall of naira against dollar is the major reason that the enaira project didn’t perform as expected.


Yes that is true.

I am of the opinion that the eNaira should have been pegged to dollars or the pounds. This would have sparked the interest of people. But would that not impact the Naira negatively?


@progrezz The question you have asked is quite pertinent. The primary reason why the reception has been low, especially within the crypto community, is because eNaira does not offer utility. What does the eNaira offer a citizen that the current banks and financial institutions do not already offer? The movement of cash via traditional banking channels is relatively fast and immediate. There are various quick transaction options, including point-of-sale (pos) terminals. Cryptocurrencies offer the opportunity to transact globally, efficiently, and immediately with anyone within minutes in a trustless manner. Cryptocurrencies also offer trading, conversion, and investment opportunities depending on exposure and knowledge (and Stablecoins option for those risk-averse). The inherent nature of CBDCs being central and offering even more power/control and monitoring oversight to the Government does not help. Privacy and security concerns are looming over the eNaira, with the Government completely silent on addressing these issues.


Yes. Thanks for adding new insights and contribution to the thread.

  1. I think the issue of security concern is a big problem. We do not trust the government to run a centralized blockchain.

  2. Also, the best case is for the AFTCA should have a CBCB pegged to a hard currency.

  3. If the eNaira is pegged to the Naira it’ll keep failing in terms of adoption

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Personally, I’m yet to see the benefits of the E-naira because ever since its release, a huge population of Nigerians are not making use of it.

As a matter of fact, E-naira only benefits the government and other financial institutions but doesn’t have much impact on the masses.

My reasons are:

  1. There’s no interest attached to saving in E-naira. No one would want to save his money in the wallet without any interest. At least the E-naira should be same with the Fiat where savers can earn some interest overtime.

  2. Data security is one important issue that needs to be addressed here. Cybercrime is becoming a topic of concern. One of the requirements to own an E-naira wallet is National Identification Number (NIN) and Bank Verification Number (BVN). Fraudsters can get access to your NIN and once that is achieved, they can as well get access to your wallet.

  3. Nigeria is populated with a high rate of poverty. Most people cannot afford a smartphone and even though they own one, they might not know how digital currencies works.

  4. If eventually E-naira becomes successful, it will make most people in traditional banks unemployed. Nigeria still has so many unemployed which the government is yet to solve.

  5. The E-naira is pegged to the Naira. Naira isn’t doing well, so people don’t yet see any advantage of using the E-naira over the fiat Naira.

In conclusion, Nigeria as a developing country, should focus on getting advanced technological infrastructure and education because that is the best way, E-naira can become productive in Nigeria.


I read a news from Nairametrics about a new strategy of the government. They want businesses to be using it in return for a discount.

I think this incentive will provide a short term trigger but it is not sustainable.


Option 2 sounds interesting, except for the jurisdictional issues it raises. However, if the Pan African Payment and Settlement Systems (PAPSS) project entirely takes off and succeeds, this could be within a realistic purview.

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Really enjoyed reading through your submission. I’m happy you said the words

This is because it’s important that whatever way this discussion sways, we always recognize that the failure of the e-Naira is deeply rooted in the distrust Nigerians have for it’s issuer(the Nigerian Government)


  • In Feb. 2021, the Nigerian government, through its Central bank, ordered a total ban on cryptocurrencies, mandating banks to close accounts found to be involved in any crypto-related activities. View here

  • Over and over again, the Nigerian government has made monetary policies that really hurt citizens making forex payments, even when these have had no known beneficial impact on the country’s economy.
    For more insight, look here

These and many more earlier events present the issuer(the Nigerian government) as not being trustworthy enough, to issue a CBDC entirely free from malpractices.

@Progrezz, if the trust is built(over time), the e-Naira will be heading for the moon, as very many Nigerians are quite knowledgeable on digital banking, and quite a good number are proficient in dealing with cryptocurrencies.


What a great and commendable submission.

Have you ever considered that there is a correlation between digital currency usage and literacy.
That points to the fact that CBCD wont handle the issue of banking the unbanked when such individual cannot read nor write.

I think, literacy level is also a factor pivotal to the achievement of the proposed benefits of the eNaira


True… Literacy is also a factor influencing its mass adoption.

Also, if, and when the e-Naira becomes popular, the literacy levels of Nigerians will determine if, and how much middlemen will be needed for transactions.


Thank you very for coming up with this @progrezz

I’d like to make a little contributions/observations on Nigeria’s CBDC.

What is eNaira?

Like coins or cash, the eNaira is a liability of the CBN. The eNaira uses the same blockchain technology as Bitcoin or Ethereum and, like them, the eNaira is stored in digital wallets and can be used for payment transactions; and it can be transferred digitally and at virtually no cost to anyone in the world with an eNaira wallet. There are, however, important differences. First, the eNaira features stringent access right controls by the central bank. Second, unlike these crypto-assets, the eNaira is not a financial asset in itself but a digital form of a national currency and draws its value from the physical naira, to which it is pegged at parity.

2. Why did Nigeria introduce eNaira?

According to the CBN, the eNaira is envisaged to bring multiple benefits, which are expected to materialize gradually as the eNaira becomes more widespread and is supported by a robust regulatory system. Key benefits include the following:

  • Increase in financial inclusion. For now, the eNaira wallet is provided only to people with bank accounts, but its coverage is expected to eventually expand to anyone with a mobile phone even if they do not have a bank account. A large number of people do not have bank accounts (38 million people; 36 percent of the adult population), and allowing those of them with a mobile phone to have access to the eNaira would increase financial inclusion and facilitate more direct and effective implementation of social transfers programs. It is expected that the move would enable up to 90 percent of population to use the eNaira.

  • Facilitation of remittances. Nigeria is among the key remittance destinations in sub-Saharan Africa, with remittance receipts amounting to $24 billion in 2019. Remittances typically are made through international money transfer operators (e.g., Western Union) with fees ranging from 1 percent to 5 percent of the value of the transaction. The eNaira is expected to lower remittance transfer costs, making it easier for the Nigerian diaspora to remit funds to Nigeria by obtaining eNaira from international money transfer operators and transferring them to recipients in Nigeria by wallet-to-wallet transfers free of charge. Exchange rate reforms, including a unified market-clearing rate, that reduce the gap between official and parallel market exchange rates would enhance the incentives for using eNaira wallets to send remittances.

  • Reduced informality. Nigeria has a large informal economy, with transactions and employment equivalent, respectively, to over half of GDP and 80 percent of employment. The eNaira is account-based, and transactions are in principle fully traceable, unlike token-based crypto asset transactions. Once the eNaira becomes more widespread and embedded into the economy, it may bring greater transparency to informal payments and strengthen the tax base. Informal and formal businesses may also benefit if eNaira adoption enhances consumption through greater financial inclusion.

3. What are the potential risks?

Like digital currencies elsewhere, the eNaira carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability. For example, eNaira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks. Relying as it does on digital technology, there is a need to manage cybersecurity and operational risks associated with the eNaira.

4. What are the authorities doing to mitigate the potential risks?

The authorities have taken measures to manage the risks. The transfer of funds from bank deposits to eNaira wallets is subject to daily transactions and balance limits to mitigate risks of diminishing the roles of banks and other financial institutions. Financial integrity risks, such as those arising from the potential use of the eNaira for monetary laundering, are mitigated by using a tiered identity verification system and applying more stringent controls to relatively less verified users. For example, for now only people with a bank verification number can open a wallet, but over time coverage will be expanded to people with registered SIM cards and to those with mobile phones but no ID numbers. The latter categories of holders would be subject to tighter transactions and balance limits. Even so, wallet holders who meet the highest identity verification standards cannot hold more than 5 million naira (about $12,200) each in their eNaira wallets. To address cybersecurity risk, regular IT security assessments are expected to be conducted.

5. What can the IMF do?

The IMF remains available to help with technical assistance and policy advice. The IMF’s Monetary and Capital Markets Department has been involved in the eNaira rollout process, including by providing reviews of the product design. The 2021 IMF Article IV mission emphasized the need for monitoring risks and macro-financial impacts associated with a central bank digital currency. [[1] ](file:///C:/Users/MTurner/OTmp/Nigeria%20CBDC%20Country%20Focus%20AFR%20cleared.docx#_ftn1)The IMF is ready to collaborate with the authorities on data analysis, cross-country studies, sharing the eNaira experience with other countries, and discussing further evolution of the eNaira including its design, regulatory framework, and other aspects.


Wow. You mentioned some salient points in your submission that deserves supporting commentary.

  1. The eNaira whitepaper or project overview highlighted many benefits. We know some of those benefits are unattainable assumptions.

  2. One of such assumptions is financial inclusiveness for the unbanked.
    Using banking and fiat is easier than using eNaira- a new innovation.

  3. Also, how many of the unbanked people have smartphone and electricity to constantly power their devices.

  4. How many of them can read and write. Will they be able to use the eNaira effectively.

Hence, eNaira is an innovation for the educated, and cant serve as a tool to drive financial inclusion.

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The current management of the Central Bank of Nigeria has no business producing an electronic currency that would be tied to the country’s fiat currency, as demonstrated by the arguments that have been eloquently expressed by the contributors here.

Unlocking the potential of the economy of the country and plugging the gaps in its monetary and fiscal operations should be the primary priority of the Central Bank of Nigeria.


Actually, we need innovation that could improve our forex. I think the eNaira can’t do that. What i think could do that is great investment in the real sector to foster export and domestic production.

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Thanks @Progrezz For this short summary but I also suggest that The main goal of CBDCs is to provide businesses and consumers with privacy, transferability, convenience, accessibility, and financial security. CBDCs could also decrease the maintenance of a complex financial system requires, reduce cross-border transaction costs, and provide those who currently use alternative money transfer methods with lower-cost options.Central bank digital currencies would also reduce the risks of using digital currencies in their current form. Cryptocurrencies are highly volatile, with their value constantly fluctuating. This volatility could cause severe financial stress in many households and affect the overall stability of an economy.now my question is how do we reduce this financial stress,and how do we maintain the stability of our economy in the world of cryptocurrency

Thanks for the constructive comment. About a year ago i published two videos where i explained key things regarding the eNaira and the Nigerian economy. Here is their link and title

  1. 3 Reasons the eNaira will benefit you than the Naira. Watch it here 3 Ways the eNaira will Benefit you more than the Naira - YouTube

  2. 5 Reasons Crypto is preferable to the eNaira. Here is the link

In these video content i explained why Crypto is better in the context of the crypto users.

Would you prefer to use USDT for cross border payment or you prefer eNaira for cross border payment?

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Yes, i agree with your point.

I think eNaira adds to the problem of the unbanked.
People in rural communities often face problems such as poor internet connection and limited education. I think these problems will make the unbanked more complex to be banked by eNaira