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By Anthony Osae-Brown, Mureji Fatunde and Ruth Olurounbi<\/strong><\/p>\n A year after launching Africa\u2019s first digital currency, Nigeria\u2019s central bank is turning to the nation\u2019s three-wheeler taxi operators to speed the adoption of the eNaira, as regulators across the world scrutinise its every move.<\/p>\n It\u2019s offering a 5% discount to drivers and passengers of the motorised rickshaws \u2013 known locally as Keke Napep \u2013 who use the eNaira. It\u2019s the latest attempt to kick-start the digital currency, which has so far attracted just one in 200 people in the continent\u2019s most populous country.<\/p>\n The central bank\u2019s focus on the digital currency is creating confusion among many Nigerians, who fail to see the difference between the government-backed eNaira and cryptocurrencies. For drivers of Keke Napep, the most popular form of transport around the gridlocked streets of Lagos and other cities, the heavy promotion of the eNaira just as authorities crack down on cryptocurrencies has them befuddled. The Central Bank of Nigeria has barred commercial banks from doing business with crypto exchanges.<\/p>\n \u201cWhy is it asking us to collect eNaira?\u201d said 23-year-old driver Hamed Lawan. \u201cI thought the government said cryptocurrency is bad?\u201d<\/p>\n When Nigeria became the first African nation to start a central bank digital currency, or CBDC, it was partly targeting the almost 40 million people in the country without a bank account.<\/p>\n The results, so far, have been disappointing. While the eNaira uses similar distributed ledger technology to bitcoin or ethereum and can be saved in digital wallets, Nigerians\u2019 passion for cryptocurrencies doesn\u2019t extend to the central bank offering.<\/p>\n Virtual currencies have lured residents of Africa\u2019s top oil producer as a hedge against inflation and currency depreciation, but eNaira is seen as a proxy for the challenges facing the continent\u2019s biggest economy and a symbol of distrust in the ruling elite.<\/p>\n Educating Nigerians about the digital currency is a key task for both the central bank and the government. As the largest economy to fully launch, it\u2019s also being scrutinised by the more than 100 nations considering their own CBDCs, according to Josh Lipsky, senior director of the Atlantic Council\u2019s GeoEconomics Center.<\/p>\n \u201cNigeria\u2019s project is hugely important to the world,\u201d he said. \u201cMy bottom line on Nigeria is the jury is still out, but the world is paying close attention to what they\u2019re doing.\u201d<\/p>\n CBDCs emerged amid the rise of thousands of cryptocurrencies, which are disrupting traditional payment systems and pushing central bankers to innovate to compete. The digital money aims to make payments safer, cheaper and more reliable, while giving governments in poorer nations an alternative to underdeveloped banking systems.<\/p>\n Although central banks typically are not aiming for universal adoption, they do need to achieve a critical mass of users, said Tommaso Mancini-Griffoli, a deputy division chief in the Monetary and Capital Markets Department at the International Monetary Fund. Authorities are targeting the \u201csweet spot,\u201d as excessive CBDC usage could disrupt the flow of credit and potentially dis-intermediate commercial banks overnight, he said.<\/p>\n The relatively low adoption until this point, while not uncommon for countries in the early phases of launching a digital currency, may be caused by insufficient incentives for commercial banks or mis-targeted consumer messaging, according to John Kiff, managing director of the CBDC Think Tank.<\/p>\n Nigeria\u2019s central bank remains upbeat. After attracting almost 1 million people to its digital platform, it\u2019s targeting 8 million users by next August.<\/p>\n All the eNaira needs is \u201ca little push from the government\u201d, said Kingsley Obiora, deputy governor in charge of economic policy at the central bank.<\/p>\n Nigeria\u2019s mobile-phone penetration of 81% makes it a vital channel to offer digital financial services to the under-banked population, central bank governor Godwin Emefiele said on Tuesday at a ceremony to mark the anniversary of the eNaira\u2019s introduction.<\/p>\n \u201cThe destination, as far as I am concerned, is to achieve a 100% cashless economy in Nigeria,\u201d Emefiele said without giving a time frame.<\/p>\n While virtual currencies have crashed this year, their speculative appeal still draws Nigerians, who can also use them to bypass the central bank\u2019s foreign currency restrictions, according to Adesoji Solanke, director at Renaissance Capital in Lagos.<\/p>\n A shortage of dollars has prompted the central bank to ration foreign exchange in the official market, prompting residents to turn to the more expensive parallel market and cryptocurrencies.<\/p>\n \u201cThe eNaira does not address any of these basic use cases, so no surprise at its low adoption rates so far,\u201d Solanke said.<\/p>\n Even though the central bank last year asked lenders in the West African nation not to transact with cryptocurrency exchanges, Nigeria ranked 11th in the world in adopting cryptos, according to blockchain specialist Chainalysis Inc.<\/p>\n Nigeria\u2019s enthusiasm for virtual currencies partly reflects a long history of naira depreciation. Africa\u2019s largest economy has devalued the naira about six times since 2015, and Bank of America Corporation economist Tatonga Rusike expects a further 20% weakening next year. Those concerns are compounded by record interest rates and inflation at a 17-year high.<\/p>\n That makes the eNaira a hard sell, particularly as it faces competition from established mobile-banking apps. With money loaded on eNaira wallets not counting as cash on a lender\u2019s book, banks also have little incentive to market the digital currency, said Babatunde Obrimah, chief operating officer of the Fintech Association of Nigeria.<\/p>\n At the same time, millennials and Generation Z \u2013 the main cryptocurrency users \u2013 are suspicious of the central bank\u2019s project.<\/p>\n \u201cThey see the regulator as hostile to them and therefore have no interest in anything it introduces,\u201d Obrimah said.<\/p>\n Since August, Nigerians without bank accounts have also been able to open eNaira wallets using a so-called USSD code and their mobile phones. Still, the government may need to provide further impetus, according to Adedeji Olowe, founder of Open Banking Nigeria.<\/p>\n Central Bank deputy governor Obiora echoes that sentiment, suggesting that if half of government salaries were paid in eNaira it could be a \u201cgame changer\u201d.<\/p>\n A positive sign is that those who have adopted the eNaira are active users, according to Lipsky of the Atlantic Council. That\u2019s the opposite of China, where hundreds of millions opened wallets during a pilot CBDC phase but with very low activity for the average user, he said.<\/p>\n For the moment, the eNaira continues to struggle, especially among the poorest communities it\u2019s targeting.<\/p>\n \u201cDid you say eNaira? I don\u2019t even have a bank account, let alone an eNaira account,\u201d said Adamu Alidu, another taxi driver in Abuja. \u201cMe, I don\u2019t know anything about it.\u201d<\/p>\n * This article first appeared on Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":" By Anthony Osae-Brown, Mureji Fatunde and Ruth Olurounbi A year after launching Africa\u2019s first digital currency, Nigeria\u2019s central bank is turning to the nation\u2019s three-wheeler taxi operators to speed the adoption of the eNaira, as regulators across the world scrutinise its every move. It\u2019s offering a 5% discount to drivers and passengers of the motorised […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[2745,6943,13269,13268,13267,5468,804],"class_list":["post-151319","post","type-post","status-publish","format-standard","category-politics","tag-bank","tag-central","tag-enaira","tag-operators","tag-rickshaw","tag-save","tag-turns"],"yoast_head":"\n