- e-Naira adoption rate remains critically low
- People are burning tires and bank branches due to cash restrictions
- The authorities plan to completely transfer the country’s economy to fully digital settlements.
In the fall of 2021, the Nigerian government unveiled the e-Naira project with pomp. It was assumed that CBDC would become an equivalent analogue of fiat, but in the year since the release, the adoption rate of digital currency was only 0.5%.
People simply refuse to use e-Naira. There were several reasons for this. Some Nigerians simply don’t understand how digital currency works. Others prefer analogues from private suppliers, others are afraid that the government will deprive them of their savings.
And these fears are not groundless. The authorities in Nigeria have embarked on a completely cashless economy, significantly reducing the circulation of paper money.
In response, the people of the country took to the streets to protest. At the end of February, the protesters blocked several main roads in Ibadan and Benin City.
The situation escalated so much that the protesters burned two bank branches and several cars. The police attributed these actions to the All Progressive Congress political party, opponents of the ruling NDP.
“Although people are unhappy with the lack of naira, the military-industrial complex took advantage of the situation by inciting the aggressive sections of the population to protest” – Edo Governor Crusoe Osagi.
Even various incentives from the government did not help. In August last year, CBDCs were “untied” from bank accounts. Nigerians were even offered a discount on taxi fares if they pay e-Naira.
And yet it didn’t work. Even with commercial banks in Nigeria effectively unable to dispense cash, CBDC adoption remains low.
Can this be called a reason for the complete abandonment of digital currency?
No, it’s more about integration methods. Problems with acceptance rates exist not only in Nigeria, but also in Pakistan, Japan and Hong Kong.
In the last two cases, low demand can be explained by a large number of digital analogues. In these countries, you can pay for purchases by simply showing your face to the camera, albeit only in some stores.
But in Nigeria, CBDC was forced on the people. The country switched to a digital economy without a proper “foundation” in the form of a reliable infrastructure, a theoretical basis, which they tried to replace with promotion. And this can really be a lesson for those countries that are considering integrating a digital currency in the future.