May 22, 2023

IMF Lauds ENaira’s 1st Year Performance, Recommends More Adaption

eNaira

eNaira

The International Monetary Fund (IMF) celebrated the first anniversary of the Nigerian central bank digital currency, eNaira, releasing a working paper assessing its first year of performance as it is considered the second-ever CBDC in the world.

According to a working paper, the IMF pointed to the eNaira’s laudable undisrupted operation for the first full year, however, the digital currency project did not move beyond the initial wave of limited adoption, Cointelegraph reported.

IMF noted that the retail end of the eNaira system is still seen as intermediated with no problems in latency. It asserted the importance of carefully adjusting the eNaira’s system architecture going forward given the country’s big population size and the density of transactions.

This recommendation comes after the fund said the Nigerian digital currency did not reach 1% of the population. “The retail wallet downloads saw a few weeks of the initial surge before tapering off. More specially, it only took 25 days for the number of downloaded wallets to reach 500,000 units—but going from there to 600,000 units took another 63 days; and to 700,000 units yet another 143 days. As of end-November 2021, the total number of retail eNaira wallets amounted to about 860,000. This is just 0.8 percent of Nigeria’s active bank accounts,” the assessment pointed out.

The average number of eNaira transactions since its inception amounts to about 14,000 per week, only 1.5% of the number of wallets out there, it added.

However, a Bloomberg report said in March that the value of transactions of eNaira has spiked 63% to record $44 million (22 billion nairas),

This increasing adoption of CBDC in Nigeria comes due to a shortage in fiat currency because the Nigerian central decided to replace older bank notes with bigger denominations because of rising inflation, therefore the lack of the banknotes forced the Nigerians to head for eNaira.

According to Godwin Emefiele, the Central Bank of Nigeria’s governor, nearly 13 million CBDC e-wallets have been opened an increase of 12 times compared to October in a country whose 90% of its transactions are being made through cash accounts.

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