Nigeria to become first African nation to issue its own CBDC
Nigeria is set to become the first African nation to publicly issue its own digital currency
Nigeria could be the first African country to introduce a live retail central banking digital currency (CBDC) as the Central Bank of Nigeria (CBN) has announced that its pilot CBDC, eNaria, will be unveiled later in 2021.
CBN recently engaged global fintech company Bitt Inc to roll out its CBDC after a contest between highly competitive bidders hinged on the companies‘ technological competence, efficiency, platform security, interoperability and implementation experience.
“Nigeria is well-positioned to become the first African nation to publicly issue its own CBDC. The CBN will rely on Bitt’s previous experience to secure that position,” claimed the company.
Bitt also developed and launched DXCDCaribe, the pilot CBDC for the Eastern Caribbean Central Bank (ECCB) in March 2019. The pilot also involved a launch of DCash, the digital version of the Eastern Carribean dollar.
The $17bn remittance Nigerian issue
CBN and Bitt said the eNaira will enable direct remittance payments between Nigerians, both within and outside of the country.
Figures from The World Bank show that remittances to Nigeria amounted to over $17.2bn in 2020. However, the average international money transfer fee is 6.8%, as Sub-Saharan Africa is the most expensive region in the world to send money to. Typically, people have spent an average of 8.9% on fees.
“Digitising the Naira will benefit the entire Nigerian financial ecosystem. The financial and humanitarian benefits that our technology offers will be transformative, especially in the lives of 50 million unbanked Nigerians,” said Brian Popelka, CEO of Bitt.
Nigeria is home to the African continent’s largest population and boasts a $514bn economy. Remittances are an integral part of life for many Nigerians, especially for the 23.7% of the population who are unbanked, as Bitt explained.
A catalyst for global CBDC usage?
According to Blockdata, remittance transfers remain one of the most inconvenient consumer transactions to date, with long processing times, high fees, security risks and an overall lack of transparency. Such issues are catalysing blockchain and CBDC adoptions.
The global money transfer market reached over $702bn in 2020, with an estimated additional $200bn by 2026, as the World Bank reported.
When looking at remittance inflows, according to Blockdata, the countries that received the most remittances in 2020 were India, China, Mexico, the Philippines and Egypt, totalling approximately $251bn in market transfers.