Nigeria wants to fix its central bank digital currency (CBDC) after a rocky launch. The Central Bank of Nigeria (CBN) has opened talks with United States-based tech firm R3 to improve the existing systems around the eNaira.
The CBN is planning to create new software for the eNaira that will give it full control over the entire scheme. Insiders claim that the talks with R3 are reaching intermediate stages, and an official agreement could be made public in the coming weeks.
Nigeria’s eNaira was developed by Bitt Inc in 2021, with the firm still playing a key role in the day-to-day management of the CBDC. Bitt disclosed to Bloomberg in a written statement that the terms of the agreement allow the CBN to seek new tech partners for the CBDC project.
“Our firm is aware that our partner, the CBN, works with various service providers to explore technical innovations for their digital infrastructure,” according to Bitt Inc’s statement. Despite the clause, Bitt Inc confirmed that it is still collaborating with the central bank to “develop additional features and enhancements.”
The eNaira did not live up to the CBN’s expectations in terms of adoption, as only less than 1% of Nigerians have downloaded the CBDC wallet. With faltering enthusiasm for the CBDC that was touted to solve the age-old problem of financial inclusion, CBN Governor Godwin Emefiele fired shots at commercial banks for stifling the eNaira’s adoption.
As the nation faces a currency swap policy debate, the central bank had high hopes that the CBDC adoption levels would spike in the absence of cash, but it seems such dreams have been dashed. Key industry players have blamed the speedy launch of the CBDC as part of the reasons for the faltering adoption numbers, accompanied by the absence of a pilot with commercial balance before going live.
Slow and steady may win the race
Nigeria’s hasty approach to CBDCs and the disappointing results have steeled the minds of central banks worldwide to opt for a slow and steady process. This sentiment was shared by the Reserve Bank of India (RBI) as it pointed out that it will be adopting a cautious stance despite racking 50,000 customers and 5,000 merchants in its CBDC pilot.
The People’s Bank of China (PBoC) has also taken a similar approach in launching its digital yuan. Experiment for the digital yuan has been underway for over two years. In that time, transaction volumes exceeded $13 billion while over 250 million Chinese citizens interacted with the CBDC.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: CBDCs and BSV
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
