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A recently proposed bill wants to legalize the use of digital currencies in Nigeria to keep pace with recent innovations. The adoption of eNaira CBDC in Nigeria has been lukewarm as the majority of the population still like to do cash transactions.

The African nation of Nigeria is making serious efforts to push the use of digital currencies in the country. Earlier this month, on December 6, the Central Bank of Nigeria announced a cap on cash withdrawals as part of a transition to a cashless society.

Last week, Babangida Ibrahim, Chairperson of the House of Representatives Capital Markets and Institutions Committee, revealed that she would soon pass a bill allowing the use of digital currencies in Nigeria. This could further fuel the use of public cryptocurrencies like Bitcoin.

For this, lawmakers must sign the Investments and Securities (Amendment) Bill 2007 and enact it. This would allow Nigeria’s “SEC” to recognize digital assets as capital for investments. Furthermore, the proposed Act will also define the regulatory roles of the SEC and the Central Bank of Nigeria.

In an interview with local news publication PUNCH last Saturday, Ibrahim said Nigeria must keep pace with global economic innovations. He added:

We need an efficient and vibrant capital market in Nigeria. To do this, we must be up to date with global practices. Lately there have been a lot of changes within the capital market especially with the introduction of digital currencies, commodity exchanges and so many other essential things that need to be considered in the new law. As I said, it is better to talk about it after reviewing the reports.

Nigeria pushes for its eNaira CBDC

Nigeria’s recent decision to phase out cash from its financial system goes hand in hand with the country’s plans to encourage the adoption of the central bank digital currency (CBDC), eNaira. The Central Bank of Nigeria (CBN) launched eNaira in October 2021 and became the second bank to launch its CBDC.

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eNaira is a blockchain-based CBDC, but unlike other cryptocurrencies, it is fully controlled and supervised by the central bank of Nigeria. The Central Bank of Nigeria has stated that eNaira’s goal is to promote greater financial inclusion.

Users can access eNaira through their respective banking apps as well as through USSD, a “quick code” available on GSM cell phones to communicate with network computers.

Nigeria’s central bank said its new digital currency policy is in line with its cashless policy. He also added that customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to complete their banking transactions.”

However, the adoption of eNaira has been lukewarm as the Nigerian economy is predominantly cash-based. Ikemesit Effiong, head of research at Lagos-based socio-economic research firm SBM Intelligence, said the cashless policy could encourage people to hoard money and also harm those it is meant to benefit the most. . Effong added:

The new policy, while hailed as a path to increased adoption of cashless transactions, is likely to deter customers from using formal banking structures. The booming bank branch business, where POS (point of sale) kiosks facilitate cash withdrawals, will suffer as the new policy wipes out most of this activity.

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