Launched nearly two years ago under the stewardship of
former Central Bank of Nigeria governor, Godwin Emefiele, eNaira is set to mark
its second anniversary in October.
Ex-President, Major Gen. Muhammadu Buhari (retd.) and the
Ex-Governor of the Central Bank of Nigeria, Godwin Emefiele, at the launch of
the eNaira in Abuja in 2021.
While the CBN championed eNaira for enhancing financial
inclusion and expanding the size of banks’ deposit base, its report, titled
“Economics of Digital Currency” obtained, warns about stability risks due to
the conversion of bank deposits into eNaira.
The report noted, “Since its inception, bank deposit
conversion to e-naira has exhibited an average monthly growth of 78.3 per cent
and totalled about N1.66bn [$2.1 million].
“Furthermore, eNaira in circulation as a ratio of average
banking system liquidity has averaged 0.1 per cent, reaching highs of 0.2 per
cent in each of May and August 2022,” the CBN report noted.
According to the report, the impact arises from the fact that
funds converted by customers into eNaira are held within wallets domiciled with
the CBN, rendering them unavailable for lending activities by commercial banks.
As of December 2021, the CBN minted a total of N2bn in
eNaira. This milestone, coupled with the nuanced challenges faced by commercial
banks due to the eNaira’s issuance and exchange processes, has sparked
discussions within the financial sector.
It noted that the sluggish growth is attributed to the slow
adoption rate among individual users, evident in the low number of active
consumer wallets, totalling 10,420.
The report revealed that the number marked an improvement
from previous months, reflecting 187,190 wallets activated for use as of July
2022.
Despite these efforts, challenges persist, hindering the
broader adoption of the eNaira in Nigeria’s digital financial landscape.
Further, the apex bank noted that eNaira can also negatively
affect banks’ overall profitability via reduced non-interest income. The CBDC
also comes with increased cyberattack risks, the report said.
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