eNaira adoption: The journey after seven months
Joseph Raji successfully registered and created his eNaira wallet late last year but several attempts to use the digital currency have proved abortive.
He is yet to do any transaction because the naira in his bank account is not converting to the eNaira wallet.
“I used my bank app to convert the naira in my account to eNaira and it was debited but reversed,” Raji said. “The eNaira never arrived in my working eNaira speed wallet.”
eNaira, Nigeria’s central bank digital currency (CBDC), has not lived up to the expectations of many users like Raji, almost seven months after it was launched, BusinessDay has learnt.
According to sources, Nigerian banks have not been raising awareness of the digital currency since October 2021 due to alleged hitches that marred the usability of the app.
BusinessDay’s visit to some banks to inquire about the eNaira confirmed that the app had been dormant.
In one of the Tier 1 banks, a staff member said they were holding an online meeting where the eNaira was the main topic. According to her, the use of eNaira began on April 26, 2022, after months of being dormant.
When asked about the transaction process, she said for users to load money to their wallet, they have to have a bank app where the bank will send money from the app to the eNaira wallet. She said to receive money to the eNaira wallet, users use the individual barcode or merchant code. Each wallet has a merchant code used for transactions.
The Central Bank of Nigeria (CBN) considers commercial banks as a critical vehicle to increasing the adoption of the eNaira. Reports had projected that the CBN, which insisted on 100 percent control of the eNaira, will simply plug into the network of consumers already built by banks to deploy the eNaira, thereby achieving ubiquity within a short time of launch. But it seems that has not been the case.
In January 2022, a report put the total number of downloads of the eNaira at 694,000 after 95 days of launch. Total downloads via iPhone Operating System stood at 136,000, while that of Android was 558,000.
In April, Miriam Olusanya, managing director of GTBank, said downloads on the eNaira had grown to 756,000. In terms of consumer wallets, the eNaira has seen 165,000 consumer wallets and 2800 merchant wallets.
“What happened was they wanted to release it in October and they brought it out for a test, but they were not able to get through with it; so they dropped it. They have not said anything to us since then,” said a product manager in one of the banks.
Osita Nwanisobi, director of the corporate communications department at CBN, told BusinessDay that the apex bank did not ask the banks to suspend deployment of the CBDC. “The eNaira was also a major subject discussed by managing directors of commercial banks during the Bankers’ committee meeting on April 14.”
“How can the CEOs brief the press on the eNaira issue and what they’re doing to deepen the process and someone comes out a few days later to say it was suspended?” he said.
Several bank customers told BusinessDay that the last time communication on the eNaira was sent to them was in November, about a week after it was released. The few who attempted to register on the app said they were turned off by the repeated hitches they experienced.
“Due to a surge in downloads on the day it was released, the platform started having problems. The CBN officials kept telling us they will work on it. At some point, they started saying we should wait until they get back to us. That is why banks stopped sending emails to their customers about the eNaira,” said another product official in one of the banks.
BusinessDay findings show that the eNaira app was last updated on November 3, 2021, about 10 days after the release of the app on October 22.
Several attempts to register on the eNaira app failed as it was unable to recognise valid account numbers from the banks.
According to an expert, the app’s inability to authenticate account numbers from banks would mean the API is not in use.
Andrew Nevin, chief economist at PwC, told BusinessDay that eNaira is a journey.
“There is no doubt, in a few years, it will be a major way to conduct low value transactions,” he said.
The eNaira came with a lot of promises, one of which was to put the country on the global map of the countries in the world with CBDC in use. Retail CBDC projects around the world were led by eNaira and the Bahamas Sand Dollar, which was issued as a legal tender in 2020, making the Bahamas the first country to launch a CBDC, according to a report by PricewaterhouseCoopers in April.
Bahamas, the first country in the world to launch a commercial CBDC called Sand Dollar, handed it over to a fintech company Island Pay, which it created to run the CBDC.
The CBN had in October 2021 announced the launch of the eNaira, arguably the first of its kind in Africa. In a statement, the apex bank said the launch of the eNaira was a culmination of several years of research work in advancing the boundaries of the payments system in order to make financial transactions easier and seamless for every strata of the society.
Apart from the ease of payments, the eNaira is supposed to tackle challenges with cross-border payments by giving Nigeria the ability to transact separately, thereby reducing the demand for correspondent banking services and SWIFT international financial messaging and payment systems for the clearing and settlement of the trade.
During the launch, Godwin Emefiele, governor of CBN, said 33 banks, 2,000 customers and 120 merchants had already registered successfully with the platform, which is available via an app on Apple and Android.
China was the first global economy to pilot a CBDC in 2020 with the digital yuan. As of March 2022, pilot programmes were running in 12 cities, including Beijing and Shanghai.
Over 80 percent of central banks are considering launching a CBDC or might have done so already.
While the CBN has yet to state what it cost to build the eNaira wallet, it however announced that it had minted N500 million eNaira and had already issued N200 million eNaira to banks. Each of the minted eNaira is backed one-to-one by physical naira.
At the 2021 Annual Bankers Dinner and Lecture, organised by the Enugu State branch of the Chartered Institute of Bankers of Nigeria, the CBN disclosed that it had recorded 34,000 transactions on the eNaira platform, amounting to over N188 million.
Adedeji Olowe, a fintech expert, told BusinessDay that a problem the eNaira had from the beginning was that it was solving a problem that had already been solved by banks and fintech companies.
The payment and remittance features were already accessible by bank and fintech customers on the different mobile apps. Also, while the bank and fintech apps created incentives such as saving money with interest, offering investable assets, insurance, loans and so many more, the eNaira had none of these incentives.
Nedu Okoli, a digital currency expert, said the eNaira began on a faulty note in view of the ban on cryptocurrency trading that preceded its launch. Many Nigerians saw the eNaira as a response of the CBN to the growing popularity of cryptocurrency, which it had sought to suppress. Many digital currency professionals who could have worked with the CBN to deepen the adoption of the eNaira felt alienated.
Also, while the CBN may have solved for the Nigerian market, Okoli suggests that the technology may not have been adequately planned for overseas transactions.