CBDC shortcomings in Africa as highlighted by eNaira

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  • Nigeria had a peer-to-peer transaction volume of over $1.1 billion between January 2021 and June 2022
  • In 2022, Nigeiria had an fx shortage similar to the one in 2016 and 2020, causing most banks to suspend dollar transactions with international banks altogether.
  • In February 2023, a naira shortage soon followed, causing a massive dilemma for the country.

The concept of a digital fiat currency was the ultimate merger between the traditional and new financial systems. Innovators and developers deemed this concept the next big thing to usher in the 4th Industrial revolution. Unfortunately, this concept received a different enthusiasm than people initially intended. By looking at the first African CBDC, the eNaira, its low adoption rate is a perfect example of why Africa’s web3 environment sim cannot handle the implications of CBDCs. However, the lucrative cryptocurrency venture has some governments pushing for its adoption. Unfortunately, this is merely a ploy to regain control before the revolutionary concept of digital currency comes and replaces fiat currency. Below are the highlights of the various disadvantages of CBDC to the ordinary African individual.

Understanding the difference before the stance of CBDC

Unfortunately, one of the main aspects contributing to the massive low CBDC adoption in Africa is the primary fact that it is a digital fiat currency, not a cryptocurrency.

Africa’s web3 environment is a thriving ecosystem that can sustain and utilize the creation and circulation of digital currency. Nigeria, South Africa, and Kenya are among the top pioneers of the massive crypto adoption rate. Nigeria had a peer-to-peer transaction volume of over $1.1 billion between January 2021 and June 2022. The daily crypto trade in South Africa exceeded $145 million worth of cryptocurrency. It became evident that digital currency was a potential source of revenue, and thus the Nigerian government sought to create the first African CBDC.

Cryptocurrency vs CBDC

Cryptocurrencies are fundamentally different from CBDCs. The only standard lining between n both types of digital currencies is the use of blockchain technology. Cryptocurrencies are independent digital currencies that run on the principle of decentralization and complete empowerment of individual users.

The low CBDC adoption rate in Africa may be fundamentally attributed to the significant difference between Cryptocurrency and the African CBDC.[Photo/Medium]
This fact led to the rapid growth of Africa’s web3 environment as more users sought crypto to attain financial freedom. In contrast, CBDC has the backing of Central banks. CBDC or Central Bank Digital Currencies significantly differ due to the presence of a central authority. This means Central Banks can impose any monetary policies their government sees fit on its digital fiat currency. 

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

Another significant difference is that crypto operates on a permissionless open network. This means that a minimum of 51% of the total users can shut down the network. CBDCs use a private blockchain network since it involves digitizing the country’s fiat currency. This generally states that users require permission to access or transact it. 

In layman’s language, CBDC is simply a replacement for cash, and the only difference between it and ordinary physical money is its digital nature hence the term digital fiat currency.

Disadvantages of CBDC in Africa and the globe

The consistent rise of Africa’s web3 ecosystem was a surprise to many, a significantly low CBDC adoption rate within the country. Initially, African governments had several sceptical opinions on Africa’s web3 environments and most towards replacing their physical fiat currency. One of the first disadvantages of CBDC in Africa is the looming fear over its potential to disrupt the national financial system of developing countries.

With poor implementation, the distribution of CBD may neatively affect the banking industry, which industry will affect the overall economy. An African CBDC has numerous potentials, but its few demerits outweigh its overall good intentions. One of the looming disadvantages of CBDCs is their openness to cyberattacks.

According to statistics, Africa had the highest rate of cyber attacks in 2022 and 2021. CBDC usage. This feature still needs to be witnessed. In addition, a lack of proper control measures over its use could render the physical fiat currency obsolete, leading to the singular dependence on the African CBDC. Unfortunately, many factors are inclined to the benefit of the government as the controlling entity.

Upon a much closer and more realistic look at the first African digital fiat currency, eNaira contains a relatively low CBDC adoption rate. This is because it is highly traceable and lacks anonymity which is an essential feature for a few reasons. This directly benefits the user since it relieves the sense of tax payments to some degree. Furthermore, its central bank can subject heavy monetary policies on it.

Take a look at the first African CBDC, eNaira. Less than 0.5 % of the total population interacts with this African digital fiat currency, and with good reason. Its government’s direct control over it generally ensures that it can quickly execute laws and taxes directly from the user’s eNaira account. Another contribution to the low CBDC adoption rate in Africa, particularly in Nigeria, South Africa and Kenya, is an already functioning digital transactions mechanism. Take into account Kenya.

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

The high market penetration of mobile money, stablecoins and cryptocurrencies will result in a low CBDC adoption rate. This is by far the most prevalent disadvantage of CBDC in Africa. In Africa’s web3 environment, eNaira has a low adoption rate simply because they are better and riskier but preferred alternatives.

Another distance of CBDC in Africa’s web3 environment is the potential for privacy intrusion. With the African CBDC and its respective wallets created b the central banks, virtually nothing is stopping them from intruding on private users to monitor transactions. This is generally a double-edged sword since African governments will be able to identify any forms of financial crime while also having the capability to impose any rules they decide on.

The disadvantages of CBDC in Africa may lead to drastic measures for some counties.

With Nigeria’s low CBDC adoption rate, its government is looking for alternative ways to increase its usage. The eNaira could give CBN greater control over their countries’ fiat currency than physical money ever would. They would be able to track and monitor every transaction that takes place, completely blowing away the central concept of Africa’s web3 environment.


Nigeria’s government created eNaira due to the fear of losing control over the money supply. The Naira has devalued over the years, and more users are looking for other alternatives. This African digital fiat currency has immense capabilities if Nigeria decides fully upscale its use. If they successfully counter the Low CBDC adoption rate, it will centralize money even more and reserve the oligopoly power of CBN. It would alternatively have complete control and power over every account in Nigeria. 

This generally means that typical Nigerian citizens will have little to no power over their finances. Of late, there have been numerous fiat currency shortages within the country. In 2022, Nigeiria had an fx shortage similar to the one in 2016 and 2020. It caused most banks to suspend transactions with international banks altogether. In February 2023, a naira shortage soon followed, causing a massive dilemma for the country.

Also, Read African Central Banks present valid arguments against CBDCs and digital assets.

The government eventually attempts to narrow down a user’s options, using its African digital fiat currency.

Unfortunately, despite being the first African CBDC, the eNaira only offers little option since its value directly reflects the Naira. One of the disadvantages of CBDC in Africa is that it is a mirror image of its physical currency. It only brings additional value by increasing its scalability and reachability. Apart from that, an African government has complete control.


The disadvantages of CBDC in Africa are highlighted from its first attempt. Nigeria’s low CBDC adoption proves there are better courses of action than using African digital fiat currency for a developing country. Accounting for the different aspects of Africa’s web3 environment CBDC ranks as a slow but steady contribution factor. Nevertheless, we can still hope that its government can utilize it through an alternative method.


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Ken Mutuku
Ken Mutuku
Your Guide to the Future of Tech, Web3, and Digital Storytelling. With a keen eye for detail and a knack for concise communication, Ken Mutuku is your go-to professional for decoding the next wave of technological evolution. Whether through captivating videos, insightful articles, or engaging presentations, he masterfully crafts messages that deeply resonate with his audience, setting him apart in the digital landscape.