Category: Nigeria

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Nigeria Becomes First Leading African Economy to Launch a CBDC

The Nigerian government has finally released the eNaira, the African nation’s central bank digital currency (CBDC), joining the league of countries already pioneering the CBDC space, including China, Sweden, and the Bahamas.

Nigeria Mints $1.2 Million Worth of eNaira

The October 25 launch of the eNaira was officiated by President Muhammadu Buhari and, for the record, the Nigerian CBDC is the first to launch in the whole of sub-Saharan Africa. About 33 local banking institutions, more than 120 merchants and 2,000 customers were already registered on the platform before launch. 

The first eNaira mint by the central bank was worth about 500 million Naira (over US$1.2 million), of which 200 million Naira (US$487,555) in eNaira has been distributed to the banks. The digital currency is designed to complement the existing national currency and payment systems and not replace them.

During the launch, the governor of the central bank, Godwin Emefiele, said the digital currency would drive a more cashless, inclusive, and digital economy: “The eNaira will make a very significant positive difference to Nigerians and Nigeria.”

Both the native eNaira speed wallet and eNaira merchant wallet applications are now available for download on Google Play Store.

Why Was the eNaira Launch Delayed?

As Crypto News Australia reported last month, the eNaira was initially scheduled to launch on October 1 to commemorate the country’s independence day. However, there were other key activities that led the Central Bank of Nigeria (CBN) to postpone the launch indefinitely. 

At least one report claimed the central bank delayed the launch in order to stress-test and recalibrate the eNaira system to ensure its efficiency, security, and scalability.

Interest in cryptocurrencies such as bitcoin has skyrocketed in Nigeria, either as an investment vehicle or a better means for cross-border payments, despite the central bank banning banks from serving local crypto exchanges and companies.

While the launch of the eNaira is a milestone for the country, it remains to be seen if Nigerians will confidently embrace it as much as they do bitcoin, given the CBDC is still within the government’s reach. 

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Crypto News Nigeria South Africa Surveys

P2P Drives Africa’s Soaring Crypto Adoption, Up 1200% Since 2020

Whether one is a sceptic or proponent, this past year has undoubtedly been crypto’s breakout year. Global adoption is up some 880 percent, but it is the African continent that has seen the most dramatic increase, according to a recent blogpost by Chainalysis.

Cryptocurrency value received by Africa, July 2020 – June 2021. Source: Chainalysis
 

According to Chainalysis, the African crypto market has grown by 1,200 percent (in value received) over the past year. Estimates put these figures at approximately US$105.6 billion between July 2020 and June 2021.

Africans Use Crypto Differently

As noted by Chainalysis’ report, emerging markets tend to turn to crypto to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions. By contrast, in developed markets it is driven more by institutional investment.

Despite being the smallest market by a long way, Africa enjoys some of the highest grassroots adoption in the world with Nigeria, Kenya, South Africa and Tanzania ranking within the top 20 of Chainalysis’ Global Crypto Adoption Index.

Supporting the notion of grassroots adoption, retail-sized transfers comprised 7 percent of transaction volume, compared to the global average of 5.5 percent.

Retail share of the market. Source: Chainalysis

Growing Popularity of P2P (Peer-to-Peer) Platforms

One of the important trends in the African crypto adoption story is the enormous growth in transaction volumes on P2P platforms (adjusted for purchasing power per capita and internet-using population). One of the main reasons for this is the lack of access to trusted, centralised exchanges. In other instances, central banks (such as in Nigeria) and retail banks often have made it difficult for customers to transfer funds across to centralised exchanges. The chart below illustrates growth in two of the more popular P2P exchanges:

Trading volumes for Localbitcoin and Paxful in USD. Source: UsefulTulips.org

Compared to other regions, Africa’s P2P bitcoin volume is a lot higher, particularly in developed regions. Importantly, since so much trade is done informally, the figures below are probably lower than reality:

P2P share of transaction volume, July ’20 – June ’21. Source: Chainalysis

Remittances Play a Big Role

Crypto-based remittances are also increasing in Africa. Some of that is attributed to the growth in international commercial transactions as Africans use crypto to pay for goods to import and sell at home.

Estimated remittance payments in Africa, July ’20 – June ’21. Source: Chainalysis

Wealth Preservation a Natural Consequence

In general, African countries tend to suffer from relative high levels of economic instability and currency depreciation. As the phrase goes: “bitcoin fixes this”. Africans would appear to have taken heed. Note the inverse correlation since May 2020 between P2P trading volume and currency depreciation in the Kenyan shilling. The case couldn’t be any clearer:

Kenyan shilling depreciation v P2P trading volumes. Source: Chainalysis

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Banking CBDCs Crypto News Nigeria Payments

Nigerian Central Bank Reveals ‘Speed Wallet’ Ahead of October e-Naira Launch

The Central Bank of Nigeria (CBN) is set to release its official digital “Speed Wallet” to facilitate next month’s launch of the e-Naira, the central bank digital currency (CBDC).

The Nigerian apex bank has been researching CBDCs since 2017 and recently revealed it has contracted fintech company Bitt Inc as a technical partner overseeing the development of the planned digital currency.

Speed Wallet Will Aid in Transacting Digital Value

According to the CBN, Speed Wallet will not compete with or replace banks in the country. However, it will be primarily used to transact value in the soon-to-be-launched e-Naira until the existing financial institutions in Nigeria establish their own compatible wallets. No transaction fee will be charged for the wallet users. 

However, the central bank has placed daily transfer limits to the three tiers of accounts available with the Speed Wallet:

  • A 50,000 Naira (US$100) limit for first-tier users without a local bank account;
  • About 200,000 Naira (US$400) for second-tier users; and
  • And 1,000,000 Naira (US$2,000) for third-tier wallet users.

The Nigerian digital currency is scheduled to launch on October 1 to commemorate the African nation’s Independence Day. The e-Naira is being designed as a non-interest-bearing asset and will function as legal tender. 

Among other features, the e-Naira will enable increased cross-border trade, cheaper and faster remittances, monetary policy effectiveness and accelerated financial inclusion, according to the central bank. 

In its August 30 press release, the CBN confirmed it is working with Barbados-based blockchain startup Bitt Inc to oversee the introduction of the e-Naira. 

In choosing Bitt Inc, the CBN will rely on the company’s tested and proven digital currency experience, which is already in circulation in several eastern Caribbean countries.

CBN press release

Crypto Adoption in Nigeria on the Rise

In February, the CBN published a circular prohibiting local banking institutions from dealing or serving crypto-related companies in the country. This hit the Nigerian crypto market at the time, as both home and foreign companies operating in the country were affected. 

However, due to the quest to hedge against the declining value of the Naira, Nigerians switched to a peer-to-peer market. Since the ban, more Nigerians have got to learn about and join the cryptocurrency market, which coincides with the growing rate of crypto adoption in the nation.

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Banking CBDCs Crypto News Nigeria

Nigeria to Launch Digital Currency “e-naira” in October

The central bank of Nigeria has confirmed it will test the “e-naira”, a Central Bank Digital Currency (CBDC), as early as October.

According to an article by Reuters, Nigeria’s Central Bank (CBN) governor Godwin Emefiele announced on July 27 that it would be launching its own cryptocurrency, called the e-naira.

Emefiele stated that the e-naira would operate as a wallet against which customers could hold existing funds in their bank account. The CBDC aspires to help Africa’s largest economy with financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement, and targeted social intervention.

Nigeria’s Central Bank governor Godwin Emefiele

Before the end of the year, the Central Bank will be making special announcements and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace.

Rakiya Mohammed, information technology specialist, CBN

CBN information technology specialist Rakiya Mohammed added that the bank wants the digital currency to make remittances more accessible for Nigerians working abroad. (Nigeria was ranked in the top 10 remittance receivers globally in 2020.)

Mohammed also stated that the CBN had given due consideration to the architecture, accessibility issues and privacy of the currency, which is being built on the Hyperledger Fabric blockchain.

Crypto Usage Booms in Nigeria

In February, Nigeria’s central bank implemented restrictions on the use of cryptocurrencies, though crypto was on the rise regardless and began to be used for peer-to-peer transactions. A few months down the line it was back in favour due to its 32 percent adoption rate by the population.

According to crypto utility website UsefulTulips, in the first half of 2021 the volumes of two major P2P platforms in Nigeria, Paxful and LocalBitcoins, were the largest in Africa, with transactions totalling over US$200 million. Nigeria is the largest market for Paxful, with around 1.5 million users and over US$1.5 billion in trading volume.

Africa has seen a massive 386.93 percent increase in P2P trading volumes on Binance since January, according to Damilola Odufuwa, Binance’s spokesperson in Africa. The user count across the continent grew 2,228.21 percent in the following four months. Elsewhere on the continent, Tanzania is also in the process of adopting cryptocurrency.

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Bitcoin Crypto News Nigeria

Nigeria To Allow Cryptocurrency In Country Due To 32% Adoption

Nigeria To Allow Cryptocurrency In Country Due To 32% Adoption

Despite the Central Bank of Nigeria (CBN) recently banning local banking institutions from serving cryptocurrency users and companies in the country, the interest in crypto has been surging.

Amid the growing adoption rate of cryptocurrency in Nigeria, the CBN governor, Godwin Emefiele, recently assured publicaly that cryptocurrency would be brought back to life in the country.

Nigeria Will Allow Cryptocurrency

The Nigerian central bank withdrew its support for cryptocurrencies in February, citing speculative risks associated with them. They also said digital currencies were used in financing illegal activities.

We have carried out our investigation and we found out that a substantial percentage of our people are getting involved in cryptocurrency which is not the best. Don’t get me wrong, some may be legitimate but most are illegitimate.

CBN governor

However, the governor assured in their 279th MPR meeting that cryptocurrencies would come back to life in the country. The governor added “We are committed in the CBN, and I can assure everybody that digital currency will come to life even in Nigeria.”.

Nigeria Records Massive Increase in Crypto Adoption

One can easily predict that the central bank of Nigeria is open to forming a framework to regulate digital currencies. This is important due to the increasing rate of crypto adoption in the country.

Nigeria is considered one of the top countries with the highest rate of cryptocurrency adoption. A recent survey conducted by Statista in different countries (1,000 to 4,000 respondents per country) showed that 32 percent used/owned cryptocurrency in 2020.

The numbers are increasing rapidly as many people are flocking to Bitcoin on P2P exchanges to hedge against the depreciating value of the national currency, Naira (NGN). This is evident as Paxful exchange recently announced Nigeria as its largest market, with over $1.5 billion in trading volume as of April.