eNaira transaction volume climbs 63% amidst cash crunch in Nigeria

The Central Bank of Nigeria (CBN) is seeing an improvement in the adoption of its digital currency — eNaira. The bank said eNaira transaction volume has risen by 63% to N22 billion (roughly $47.8 million) so far this year.

Zoom in

• According to CBN Governor Godwin Emefiele 10 billion eNaira has been minted so far, with about 3.4 billion already in circulation, per a Bloomberg report.
• He added that 13 million e-naira wallets have been created since October 2022 — a 12-fold increase over that period.
• He attributed the surge in the adoption to the welfare program created by the government to give aid to qualified Nigerians. This resulted in the opening of 4 million new e-wallets, he said.

Key Quote

“The eNaira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions,” the governor said.

• Although the government's social welfare program played a role in the increase of CBDC adoption, it remains unseen whether the scarcity of cash also contributed to this trend.
• Late last year, the CBN — in its drive for a cashless economy — redesigned the naira note and attempted to replace the old notes to reduce cash hoarding, mop up liquidity and curb inflation.
• This affected commercial banks and disrupted electronic banking transactions, sparking nationwide protests among Nigerians.
• However, the CBN released the once-mopped-up cash back into circulation in March, after the elections.
• Emefiele said that the amount of currency in circulation dropped to N1 trillion from N3.2 trillion in September.

Zoom out

• The eNaira, launched in October 2021, received a rather slow response in adoption. In November 2022, the number of wallets was less than 1 million.
• However, with the cash scarcity easing gradually, it remains unclear how the CBN plans to sustain the sudden surge in the eNaira adoption — as cash payments still make up a significant percent of Nigeria’s informal economy.