Central Bank Digital Currencies: Big Failure in Nigeria

Central Bank Digital Currencies: Big Failure in Nigeria. By Nick Corbishley.

Only one largish economy has actually fully launched a CBDC, and that is Nigeria. And the results have so far been disastrous.

The eNaira has so far been a total flop … One year after its launch, in October 2021, fewer than 0.5% of the population had downloaded an eNaira wallet …

Worse still, only 282,600 of those accounts were currently active. Meanwhile, interest in cryptocurrencies has surged.

To try to salvage its monetary experiment and essentially force people to use digital means of payment, preferably the so-called “eNaira”, Nigeria’s government launched an all-out assault on cash in December. Taking a leaf out of India’s book, the government began issuing redesigned high value notes from mid-December and gave residents until the end of January to turn in their old notes. When it became clear that the banking system wasn’t even close to ready to disburse the new notes, the deadline was extended to Feb 10 …

According to the Nigerian Central Bank and government, the demonetisation campaign is intended to mop up excess cash liquidity, stay ahead of counterfeiters and take greater control of Nigeria’s money in circulation, more than 85% of which is currently outside the vaults of the country’s banking system. But another key goal is to salvage Nigeria’s floundering central bank digital currency, the eNaira. And the result has been total chaos. …

There is now an acute shortage of money. As in India, the result has endless lines at ATMs. Commuters in the capital and beyond have been left stranded with no cash to pay for transportation back home. Many small businesses, which represent the lion’s share of the economy, and predominantly rely on cash payments, have had to shut down as their customers have no money to pay.

Astonishingly, as the central bank has withdrawn the old notes from circulation, Nigeria’s mint has not come even close to replenishing the money supply with new notes. In fact, the central bank does not even know how much new currency is being printed. When grilled by members of the House of Representatives during a plenary session, Aishah Ahmad, the deputy governor of CBN, admitted she had no idea “how much was printed of the new naira notes”. …

Step 1: Make them put their money in our banks:

Godwin Emefiele, the CBN governor, has hailed the experiment as a success, given that 80% of the $7.2 billion previously held in private hands had been deposited with financial institutions. Finance Minister Zainab Ahmed concurred, saying: “The only sore point is the pain it has caused to citizens.”

Nigeria is famed for its scams. But don’t laugh, because it’s coming our way soon:

According to the Atlantic Council’s CBDC tracker, 114 countries, representing over 95 percent of global GDP, are exploring a CBDC. That’s up from 35 countries in May 2020.

Eighteen of the G20 countries are now in the advanced stage of development. Of those, 7 countries, including China and India, the world’s two most populous nations, are already in pilot. Eleven countries have fully launched a digital currency, with the latest being Jamaica, and China’s pilot is set to expand to most of the country in 2023.