The Central Bank of Nigeria (CBN) is working on making the eNaira accessible via Unstructured Supplementary Service Data (USSD), making the state-backed digital currency available to the millions of Nigerians who don’t own a smartphone.
Data shows that about 101 million Nigerians access the internet via their mobile device, while those using smartphones are estimated to number between 25 and 40 million. While these are massive numbers, smartphones only account for between 10 and 20 percent of the population.
USSD functionality will avail the eNaira to over 100 million people. This group might be more willing to adopt the CBDC as they are mostly those who earn low incomes and are generally unbanked. Most of these also live in rural areas where banking services are not as readily available, making them a prime target for the eNaira.
As CoinGeek has reported previously, the adoption of the eNaira has been underwhelming. The digital currency launched in October 2021 and has garnered less than 800,000 downloads in the seven months since. According to some reports, half the downloaders have never used the eNaira app. Merchants haven’t taken to the digital currency either, with less than 100 retailers accepting eNaira payments, a disappointingly small number for Africa’s largest economy.
Despite the bleak performance, Deputy Governor of the CBN, Kingsley Obiora, believes that the CBDC has a bright future and will play a critical role in financial inclusion. In his speech during the IMF African Department Speakers Series, he said that the CBN had raised financial inclusion in Nigeria from 48% to 70% since 2014, when the current leadership took office.
“That still leaves us with about 30 per cent of our population out of the financial system and we believe the CBDC can help reduce that number even more,” he told the attendees of the virtual event.
“A lot of people might not have smartphones but that is essentially the next step of our improvement in the CBDC, to introduce the USSD code, so those that do not have smartphones can still transact,” he added.
The eNaira has the potential to become one of the world’s premier CBDCs. Aside from Nigeria being a vibrant economy and the largest in Africa, the country has high penetration in digital payments and is home to several multi-billion dollar digital payment startups, including Flutterwave and Chipper Cash. From $324 billion in 2008, Nigeria’s digital payments have grown to hit $2.4 trillion presently.
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