eNaira Central Bank Digital Currency (CBDC) for Financial Inclusion in Nigeria

Abstract

There is much interest in central bank digital currency (CBDC) among central banks around the world. African countries have also joined the league of nations that are conducting research into CBDC. The launch of the eNaira CBDC in Nigeria has drawn substantial interest from observers around the world including central banks. The eNaira CBDC is envisaged to bring many benefits, and financial inclusion is considered to be one of such benefits. This paper explores the eNaira CBDC and its potential to increase financial inclusion in Nigeria. I show that the eNaira CBDC can increase financial inclusion by (i) offering an easy account opening process for greater financial inclusion (ii) enabling digital access to diverse financial services in the financial system, (iii) offering low-cost financial products and services, (iv) avoiding unexplained bank charges that causes financial exclusion, (v) attracting people who have lost confidence in banks, (vi) introducing interest-bearing eNaira, and (vii) using offline channels to access the eNaira.

A Review of Central Bank Digital Currency: Current Status and Changing Trends

“…Separately, they mention the F. Ceylan İzmir İktisat Dergisi / İzmir Journal of Economics Yıl/Year: 2024 Cilt/Vol:39 Sayı/No:2 Doi: 10.24988/ije.1422562 precautions to be taken for the introduction of the projects of Digital Euro and Sweden's e-krona. Another study that evaluates what factors are effective in bringing CBDCs forward, their potential benefits, and the recent developments related to this issue was conducted by Ozili (2023). He concludes that CBDCs are effective in providing access to alternative paying solutions and transforming the financial system into a more accessible and inclusive system in the future.…”

“…As the first African country to issue CBDCs, Nigeria has also shown a trend toward CBDCs with various expectations, such as acceleration of cross-border trading transactions, increased level of financial participation, cheaper and faster remittance entries, and increased efficiency of monetary policies, payment systems, and tax practices. The easy adaptation of Nigerian citizens to CBDCs, the high number of central banks taking initiatives against CBDCs, the emerging cybersecurity threats in payment transactions, and the drive to take control have triggered the Central Bank of Nigeria to launch a pilot project called Project Giant in mid-2021 (Ozili, 2023). e-Naira, the second CBDC issued after the Bahamas Sand Dollar, was premiered in October 2021, but the adoption level of e-Naira is not yet at the desired levels, according to an IMF report published in 2023 (Ree, 2023).…”

From Cash to Central Bank Digital Currency: Can Gen Z Adopt It?

“…Pembaruan teknologi mengenai sistem pembayaran ini lebih banyak dikembangkan oleh Negara berkembang sebagai aktualisasi kemajuan teknologi dari penggunaan transaksi secara tradisional secara bertahap (Gupta et al, 2020;Hung et al, 2021;Wamba et al, 2021;Yusfiarto et al, 2021). Salah satu teknologi yang saat ini sedang dikembangkan dalam bidang keuangan adalah mata uang digital (central bank digital currency) yang telah dikembangkan di beberapa Negara seperti China (Xia et al, 2023), Bahama (Gross, 2020), Nigeria (Ozili, 2023), serta beberapa negara lainnya. Munculnya mata uang digital ini, tentunya berkaitan dengan dua jenis pembahasan yakni kripto dan mata uang digital bank sentral yang terpusat (central bank digital currency).…”