eNaira Eco
Finance - January 11, 2022

eNaira Vs Eco: A Clash of African Cryptocurrencies?

The eNaira technically serves as a setback to a unified African currency as Nigeria would have a vested interest in promoting the eNaira rather than a substitute.

Nigeria’s digital currency, eNaira, was launched by the Central Bank of Nigeria (CBN) in October 2021, preceding the proposed West Africa single currency – Eco by the Economic Community West African States (ECOWAS). The eNaira, Africa’s first digital currency, has garnered national and international interest.

The eNaira app was installed over 450,000 times by users with over 12,000 transactions valued at $150,100 (N62 million) in three weeks. Also, the eNaira, after a little more than a month, was utilised to execute 37,810 transactions increasing the value to N208.91 million.

Although, it falls far short of the expectations due to the rise in the adoption of bitcoin in Nigeria over the last two years. Experts, however, expect an increase in 2022 with a forecast of over $100 million in the third quarter of the year.

Nigeria’s president, Muhammadu Buhari, also stated at the currency’s official introduction that digital money might add $29 billion to the country’s GDP over the years to come.

However, the digital currency launch has created a clash between Nigeria’s eNaira and Eco, the single currency for West Africa by ECOWAS.

According to a report, introducing the ECOWAS single currency will help promote commerce, reduce transaction costs, and promote payments across the ECOWAS countries. This will also be aided by the African Continental Free Trade Area (AfCFTA) agreement to eliminate tariffs on products and services.

However, its effectiveness is based on all the economic alignment of the countries to avoid economic segregation.

Out of the 15 countries, five countries meet the stated criteria for the single currency. The unattainable criteria coupled with the effect of the COVID-19 pandemic led to the postponement of the single currency launch to 2027. 

Due to the delay on the Eco currency, Nigeria experts, therefore, calls for the need to continue promoting the eNaira. Dr Nnamdi Onochie, the former diplomat, recommended that Nigeria’s government should boost the Naira and abandon the Eco currency.

He said, “Increased strengthening of the value of the eNaira is more important for Nigeria than dissipating energy on floating the Eco for member-states of the ECOWAS.

Expanding the Nigerian economy is more important and should be non-negotiable because it is in the best interest of the sub-region for Nigeria to be the dominant economy”.

Oluwadamilola Ogunwale, the Research Analyst at Edgefield Capital Management Limited, opined that the CBN would want Africans to adopt the eNaira currency. He said, “Every country would like that the continent embraces their currency, and Nigeria, as the first country to have a digital currency, would want their scheme to succeed.

Hence, the launch of eNaira can technically be seen as a setback to single African currency as Nigeria would have a vested interest in promoting the eNaira rather than a substitute. Also, the eNaira is more realistic in the Africa current economy the project seems a long way from fruition.”

Nkwodimmah Pascal, Financial Manager for Opera and a scholar, said, “I believe a lot of work and money has gone into improving the eNaira, so any suggestion of another currency may be perceived as a threat to the eNaira”.

eNaira provides an alternative for Africa’s single currency since it permits cross border payment”.

Akeem Akorede, an ALM Analyst at Coronation Merchant Bank, said, “ Most countries are yet to meet the current criteria, especially achieving inflation band of less than 10%, with Nigeria one of the giants in the union yet to achieve this target.

Since adopting a single currency seems not feasible, member states in a report are advised to focus more on fostering long-term growth by reinforcing convergence on low inflation, sustainable fiscal policies, and structural measures.

If West African countries can expand intra-regional commerce, foreign investment, and job creation, they will meet the single currency criteria.


READ ALSO: 3 Trends in Africa’s Cryptocurrency Sector to Expect in 2022

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