- President Buhari stated that a properly managed e-Naira could add over US$29 billion to Nigeria’s GDP
- Mr Tinubu promised to create over one million jobs in the ICT sector in the first two years
- The number of e- Naira retail transactions since its inception is around 802,000
In a hotly contested and controversial presidential election in Nigeria, Bola Ahmed Tinubu has been announced as the President-elect. Mr Tinubu closes into power at a time when the rate of inflation in the country is insane. Additionally, he takes over when there is a ban imposed on cryptocurrency.
The exiting administration declared cryptocurrency engagement illegal in February 2021. Crypto enthusiasts are hoping that things will change once the new administration takes over from President Muhammadu Buhari.
Among the reasons why crypto is flourishing in the country despite the ban, is because of the rate of inflation.
The rate of Inflation in Nigeria
Recently, protests have broken out in Nigeria over the scarcity of the fiat Naira. There has been a naira redesign policy for new notes that began circulation in December last year. However, many Nigerians are yet to receive them. The old notes were to remain legal tender until February 10, 2023. That now seems a goose chase that has forced the country to shift the deadline to end of year.
The changing of the bank notes was the government’s attempt to curb counterfeiting, the hoarding of cash, ransom payments and ultimately reduce inflation. However, Nigerians can’t get a hold of cash despite many of them preferring to trade in cash than banks. Over 40 per cent of Nigerians are unbanked, but with the chaos that has accompanied the naira redesign policy, many are shifting to mobile money and internet banking apps. These apps have experienced heavy traffic due to the long frustrating cues in Nigerian banks.
The new administration should adopt digital currencies
On the backbone of the e-Naira, the new administration has the option to transition to digital money. As witnessed by the frustrations that Nigerians are experiencing with banks, the population would react positively to a digital Naira. Cryptocurrency adoption continues to thrive due to the uncontrolled level of inflation in the country.
Under political goodwill, the e-Naira could be a game changer. Since its inception, however, the uptake of the CBDC has been rather slow. IMF reports that in the first year of its adoption running to November 2022, there have been 942,000 retail wallet downloads, representing 0.8 per cent of active bank accounts.
The number of e- Naira retail transactions since its inception is around 802,000 which is less than the number of the total wallets, indicating that some are dormant.
Dr Godwin Emefiele, the CBN governor, revealed that they had issued 2.1 billion Naira to financial institutions while integrating 33 banks that are live on the e- Naira platform.
The e- Naira could help the new administration to increase financial inclusion, enable direct welfare disbursements to Nigerians, reduce cash processing costs, improve the availability of money from CBN, facilitate diaspora remittances, increase revenue and tax collection and improve the efficiency of cross-border payments.
President Muhammadu Buhari stated that a properly managed e-Naira could add over US$29 billion to Nigeria’s GDP over the next 10 years.
The Outlook of digital currencies under Bola Tinubu
If his electoral victory stands, the tech industry is a top priority in the mogul’s agenda.
Under the digital economy, Mr Tinubu promised to create over one million jobs in the ICT sector in the first two years. He added that he will implement policies that will enable the government to offer outsourcing services to the youth. His manifesto also outlines that he will champion tech manufacturing. He added that the importation of mobile phones costs Nigeria millions of dollars and they will substitute with local manufacturing.
Most importantly, Tinubu promises to ramp up the use of blockchain in finance and banking, digital revenue collection and the use of cryptocurrency assets.
“We will establish an advisory committee to review the existing regulatory environment governing blockchain technology and virtual asset services and, where necessary, suggest changes to create a more efficient and business-friendly regulatory framework. We will also encourage the CBN to expand the use of our digital currency, the eNaira,” the Manifesto reads in part.
While the outlined objectives by Mr Tinubu could fall for just being promises, the future is bright for cryptocurrency adoption as the President-elect is approaching the situation from a positive direction.