Nigeria 2023 elections: Is the Naira Scarcity a ploy to force eNaira adoption?

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  • At the beginning of February 2023, commercial banks in cities and towns could not swap old currency notes with newly designed naira notes
  • As of October 2022,  only 0.5% of its total population transact with eNaira
  • On 6th December 2022, the CNB listed eNaira as one of the available payment options within the country.

 As Nigeria’s election day draws close, tension builds up as potential candidates rush to solidify their impression on the people. This new shift of governments will signify a crucial point in Nigeira’s history. Unfortunately, the people may already be experiencing the new regime’s effects. In recent news, the CBN announce a naira scarcity that has thrown the entire economy slightly into a shift. This is no new news as Nigeria’s economic state is currently surviving on various aspects, including the eNaira adoption, the first African CBDC. The government urges its citizens to use this digital currency as an alternative amid this naira scarcity. However, this lack of Naira appears convenient, especially given the recent slump in eNaira adoption.

Nigeria suffers due to Naira Scarcity.

On Wednesday, 2nd February, Nigerians received a rude awakening as commercial banks announced a naira scarcity throughout the entire country.

In 2022, Nigeria’s economic state received an entire makeover as the old currency received a new design.

Naira scarcity
The newly redesigned Nigerian fiat currency has caused a massive Naira scarcity within the country, causing frustration among citizens.[Photo/African-Business]
Nigerian President Muhammadu Buhari has recently announced a new design of the naira currency notes. Buhari stated that this new initiative would curb excessive cash and combat crime. The governments redesigned the 200, 500 and 1000 naira bills and initially intended to launch it Mid-December 2022.

Also, Read Why Nigerians should be wary of Central Bank Digital Currencies.

Fortunately, CBN stated that the launch would occur earlier. They further stated that this new design would help remove excess cash from circulation. According to their statistics, over 85% of the total money available for public use would be rendered useless by its full adoption.

Unfortunately, it did not go according to their initial plan. 

Long-lines on ATMs

At the beginning of February 2023, commercial banks in cities and towns could not swap old currency notes with newly designed naira notes. According to Peter Alonge, a businessman in Nigeria, this recent naira scarcity has significantly caused unforeseen setbacks in Nigeria’s economic state. The Central Bank insisted that Nigerians move to the new Naira bills. They have been unable to cater to the bills’ current demand sufficiently. Most business owners and citizens in Nigeria are enraged. They demand authorities take stiffer action against commercial banks that fail to dispense the new notes.

Many are lined up in front of ATMs across Abuja and other cities. Each was trying to change their old notes for new ones. Charity Igwa, an operator of a local Cash Point Service, states that most individuals line you for hours only to get the same old notes from before.

The CBN gave an initial stern warning against Nigerians to swap all their Old Naira notes for new ones. They even set a deadline of 31st January, rescheduled to 10th February.

Unfortunately, Commercial banks may need help to keep up with this deadline causing a massive naira scarcity rate. If not dealt with, swiftly Nigeria’s economic state may suffer directly. Although this Nigeria is still thriving economically with the naira scarcity, their government may finally have a valid reason to push their citizens to use the First African CBDC, Naira.

Is the Naira Scarity in relation to eNaira adoption

Despite its highly volatile fiat currency, Naira, Nigeria’s economic state is consistently rising. This is because of the rapid adoption rate of digital currency in Nigeria. It is currently Africa’s leading country in cryptocurrency. It has one of the highest trading volumes in Africa and around the globe. Soon after, Nigeria’s government noticed that a select population was thriving within their ecosystem despite the unstable nature of the Naira.

Also, Read Nigeria weaponizes the eNaira against crypto adoption.

When the World Bank announced that Nigeria had the third largest bitcoin trading volume globally, the Nigerian government saw this as an opportunity. The same year, Nigeria created the first African CBDC, the eNaira. This was an attempt to display its intentions to join its fellow citizens in crypto trading. According to CBN, this new African digital currency would provide a much safer means for Nigeria’s economy to adopt Web3 technology. Unfortunately, Nigerian Crypto traders soon realized the difference between the crypto industry and CBDC. After one year of circulation, eNaira adoption is still at an all-time low. 

Low advocacy

It became clear that the eNaira was an African digital currency controlled by the government directly. This stood against every single notion the crypto industry stood for. With CBDC, the government was the central authority that could determine and control every majority of the eNaira, which would receive, transact, and store it. The low eNaira adoption rate reflects Nigerians’ distrust of this African digital currency.

The first African CBDC, eNaira, is currently facing a low adoption rate due to its various constraint nature as a CBDC.[Photo/Business-Post-Nigeria]
The project has struggled to stay afloat as its citizens prefer average cryptocurrencies over this African CBDC. On October 2022, Bloomberg reported that only 0.5% of its total population transact with eNaira. Within the same year, over 40% of Nigerians actively participated in the crypto industry. Adesoji Solanke, fintech and bank director at Renaissance Capital, stated there is no mass adoption of the eNaira on the consumer or merchant side of the payments equation.

Due to the empowerment crypto trading has done for Nigerians in cross-border transactions, turning to eNaira is a lesser option for many. However, the eNaira adoption rate may experience a significant rise to the recent naira scarcity.

Is it all a coincidence?

Rapid change will require several steps throughout humankind and any government’s history. Before South Africa established a recent crypto legal framework, it placed several measures. It established a few crypto ATMs within Johannesburg to see whether or not crypto traders would actively concert their Bitcoins in fiat currency. This significantly boosted its overall crypto adoption. As such, the government established a straightforward way of gaining directly from crypto traders. Thus, in addition to other factors, it paved the way for an elaborate crypto legal framework. Nigeria may take such a route.

Also, Read Nigeria: Crypto adoption-value depreciation tug of war intensifies.

Intertwined nature

Unfortunately, despite the low adoption rate of this African digital currency eNaira, its governments still need to recognize crypto as a financial product. This generally means that users cannot use their digital currencies directly to purchase or buy goods directly. This limits the usability of cryptocurrency if it undergoes several processes. 

With the naira scarcity, business owners and local merchants are forced to look for alternative payment means. Since CBN does not recognize crypto as a financial product, it leaves only one alternative, eNaira.

On 6th December 2022, the CNB listed eNaira as one of the available payment options within the country. According to the Director of BANKING Supervision, Haruna Mustafa, Nigeria’s economic state would greatly benefit if customers would look at other payment alternatives such as eNaira. Essentially its government has set a conducive environment ensuring that Nigeria’s economic state would significantly utilize eNaira. 

The ongoing disposal of old naira bills and the elaborate “insufficient ” supply of new Naira notes set the perfect stage for the first African CBDC to shine.

A full-scale eNaira adoption may soon follow with establishing a new government within Nigeria. However, many crypto traders withi the country still need to be sceptical about the true motives behind this African digital currency. Some say this African CBDC is a ply by governments to control the rapid growth rate of crypto traders. At the same time, others set it as an opportunity for Nigeria’s economic state to thrive. The naira scarcity is absolute, and the low enaira adoption rate is enough for the government to apply pressure on its usage.


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Ken Mutuku
Ken Mutuku
I am an enthusiastic writer who believes that facts, knowledge and opinions can be expressed vividly with just a few words. I think that all forms of writing achieve this; hence I have a wide area of expertise and interest, such as cryptocurrency, psychology and the human mind.
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