IMF Says eNaira’s Adoption Is ‘Disappointingly Low’

The International Monetary Fund (IMF) shared that the usage of digital currency, eNaira, has been "disappointingly low."

The digital currency, which was launched by President Muhammadu Buhari last year in 2021, has not been used by 98.5 percent of people who downloaded the eNaira wallets.

"The retail wallet downloads saw a few weeks of the initial surge before tapering off," IMF disclosed in a working paper, titled "Nigeria's eNaira, One Year After," Punch reported on Monday.

According to the papers, within 25 days 500,000 units of wallets were downloaded. However, reaching the mark of 600,000 units, took 63 days. The milestone of 700,000 units was achieved in 143 days.

As of November 2021, the total number of retail eNaira wallets amounted to about 860,000, which is just 0.8% of Nigeria's active bank accounts.

"Merchant wallet download has reached about 100,000 in end-June, which is about one-eleventh of the number of merchants with Point-of-Sales (POS) terminals—which enables credit or debit card payments," IMF noted.

The organization explained that the downloaded wallets had low transactions while many of them are inactive.

"The average value of eNaira transactions has been 923 million naira per week—0.0018 percent of the average amount of M3 during this period," it stated. "The average value per transaction has been N60,000. Cost savings from integrating CBDC—as a bridge vehicle—in the remittance process may also be substantial."

eNaira was launched on October 25, 2021, at the state house in Abuja by the president. It was expected to work as a digital form of national currency, Naira, that is issued by the Central Bank of Nigeria.

It was introduced to leverage the advantages of digital technology like enhanced transparency, easy transactions, and less use of paper cash.

Following the launch of eNaira, the government announced a currency redesign policy in which three denominations were redesigned out of eight including N200, N500, and N1000. The new notes were launched on Nov. 23, 2022.

However, Nigeria is still struggling as the new currency redesign policy mopped up over 70% of cash in the country and caused the country an estimated loss of N20 trillion.

World Bank shared last month that the Nigerian currency naira lost 10.2% of its value due to a rise in food and fuel prices in the country.

Although the government seems to be still trying to encourage people to use digital currency more.

Last month, Central Bank of Nigeria's Director of Banking Supervision, Haruna Bala Mustapha urged Nigerians to go cashless as it will help to promote loan services for MSMEs (Micro, Small, and Medium Enterprises).

Mustapha said that the bank doesn't want to eliminate cash completely from the market but instead, wants "to reduce the use of cash and encourage people to make electronic payments."