Abuja, Nigeria – James Ndubuisi, an in-house lawyer at Lagos-based entertainment company SoundHive Group, is adamant that he has no need for eNaira – Nigeria’s official digital currency – or its app.
“It absolutely needs to be packed,” the 30-year-old told Al Jazeera.
He downloaded the app the same day it was released, October 25, 2021. A month later, he says his qualities are neither valuable nor sensible.
When asked if ENaira could be accessed via USSD codes, a quick short code available even to users without a mobile phone, and if he would consider trying that option, Ndubuisi simply said, “Never heard of that. I’m not interested in finding out.”
When the Central Bank of Nigeria (CBN) launched the eNaira, a digital form of the naira and Africa’s first national digital currency, officials at the apex bank said it would ultimately enable financial inclusion and fiscal benefits, the economy.
In a televised address at the time, President Muhammadu Buhari said the adoption of eNaira and blockchain technology “can increase Nigeria’s GDP by $29 billion in the next 10 years.”
The eNaira was created as part of the CBN’s cashless policy to improve cross-border trade, expand access to financial services, increase remittances from a large diaspora base and ultimately boost the country’s economy.
Half of Nigeria’s 200 million people do not have access to bank accounts, so the apex bank said it hoped to facilitate daily transactions between business owners and their producers and customers across the country.
After six months, analysts are wondering if the new digital platform will succeed where the traditional banking system has not.
Demand and supply
According to a report by Enhancing Financial Innovation & Access (the PDF), only a third of Nigerians in rural areas are close to financial service providers. And even for those in urban areas, constant fluctuations in the naira against the US dollar cause constant frustrations.
Not surprisingly, many are looking for alternatives.
From April 2022, cryptocurrency exchange Kucoin reports that 33.4 million Nigerians own crypto-assets or use peer-to-peer networks despite CBN restrictions on cryptocurrency transactions.
The introduction of eNaira came seven months after the CBN clamped down on cryptocurrency transactions because digital currencies have become well-suited for many illegal activities “including terrorist financing and tax evasion”.
Unsurprisingly, some members see it as a natural response to the trend of increasing cryptocurrency usage, but the jury is still out on whether eNaira can improve financial inclusion.
“The adoption of digital currency is definitely growing, given that businesses and individuals are constantly looking for ways to preserve value,” Jennifer Echenim, a front-end engineer who works with Web3 Technologies, told Al Jazeera. “However, the naira continues to devalue; thus, taking eNaira looked like a failure even before it started.
“It seems to me as a continuation of the restrictions placed on other digital currencies […] “Proper research was not done before the launch,” he said. “For a currency to be valued, there has to be a demand; that’s basically what drives digital currencies (demand). Nobody is looking for the Naira. It’s not acceptable or useful even outside of Nigeria. Creating a digital currency on that is definitely a failure.”
In 2020, the naira was sold at $360 on the black market, but as on Friday, the exchange rate was $1:N600.
Cash is still king
At the launch, CBN Governor Godwin Emefiele said over 2,000 customers had joined.
It was reported in January 2021 that 95 days after its launch, the eNaira app had been downloaded 694,000 times with over 35,000 transactions from 160 countries. Today, he says local media reports, there have been approximately 700,000 total downloads.
By comparison, just one month after El Salvador launched its “Chivo” digital currency, three million people – almost half of the population – downloaded it. “There are more Salvadorans with Bitcoin wallets than traditional bank accounts,” Forbes he wrote October 2021.
Also, the eNaira Speed Wallet app has a rating of 2.2 out of 5 on the iOS App Store and 2.9 out of 5 on the Android Play Store. And there seems to be more criticism than praise on the app page and in real life.
It took Oghenemarho Orukele, an engineer and researcher from Paris, almost three days to create an account after downloading it in October 2021. The signup form asked for his bank verification number and then the app refused to follow up with an email address. , he said.
When he finally got to the second step of the process, the One Time Password (OTP) he was supposed to receive via email arrived a few hours later. It took two days to fix it, after which Orukel said “the navigation was good”.
Eugene Adavore, a 22-year-old UI/UX designer, downloaded the design to see if it was user-friendly and to make sure “in the long run, the product would meet the need it was designed for.” He called it a “great initiative” but said it needed a thorough overhaul to be successful.
Many economists also believe that eNaira’s macroeconomic goal of a cashless society is yet to be met.
In January 2012, the CBN introduced a cashless policy to promote electronic transactions and reduce the circulation of physical cash nationwide. It was piloted in Lagos, the commercial capital, and rolled out nationally two years later.
But in many parts of Nigeria, cash is still king.
For Ese Osamwonyi, a senior analyst at Lagos-based socio-political risk SBM Intelligence, policy failure – such as the slow adoption of the eNaira – means the government has not been inclusive enough in its move towards a cashless economy. .
He told Al Jazeera that Nigerians living below the poverty line conduct daily transactions with street vendors, motorcycle taxis (okada) and other retail businesses that do business in cash. For this large group, electronic payment channels are not a priority.
“The introduction of these last-mile merchant segments into the use of eNaira for daily business transactions will drive their adoption among low-income/below-poverty people,” Osamwonyi said.
In response, the CBN said it has come up with viable solutions for this demographic, including provisions to use other forms of identification (such as fingerprints) to access their eNaira wallet and USSD codes for those without smartphones.
“[The] CBN policy cannot be effective if the proportion of the informal sector is much higher than the formal sector,” CBN director of monetary policy Hassan Mahmud told Al Jazeera.
The CBN says it is collaborating with telecom operators to ensure access to eNaira even when a person is out of service. The goal, Mahmud said, is to improve the penetration of monetary policy, bringing many sectors of the economy that are outside the banking system into it.
Years ago, the CBN introduced the Nigerian Incentive-Based Risk Sharing System for Agricultural Loans to boost agribusiness by providing rural capital to farmers. With eNaira, the CBN believes that these funds can be transferred more efficiently, cutting out middlemen and limiting corruption.
But small and medium enterprises – which account for 96 percent of Nigerian businesses and 84 percent of the country’s jobs, according to PricewaterhouseCoopers – may not benefit from eNaira because of a lack of information about it.
Al Jazeera spoke to dozens of small businesses; most were hearing about eNaira for the first time, and many said they were unaware of any business owners currently using it. Some asked if, and how, it was different from conventional banking apps.
In Lagos, 29-year-old baker Zainab Yakura N’jie wants to adopt the app even though she hasn’t downloaded it yet. “The world as we know it is becoming very digital, so being able to make payments through your phone will make things easier and faster,” he told Al Jazeera.
Looking at people like N’jie, Osamwonyi says awareness is key.
“Government needs to increase awareness among stakeholders about the benefits of cashless economy, as well as share insights on electronic channels and modes of payment available to entrepreneurs in the informal economy sector,” he said.
