Why are Nigerians not Embracing eNaira as Africa’s First Digital Currency

Nigeria made history in October 2021 by launching the eNaira, Africa’s first Central Bank Digital Currency (CBDC). Issued and regulated by the Central Bank of Nigeria (CBN), the eNaira was touted as a breakthrough innovation to improve the country’s payment systems, drive financial inclusion, and boost economic growth. 

Despite these lofty promises, the adoption of eNaira has been disappointingly slow, and many Nigerians are yet to fully embrace this digital currency.

The struggle with cash-Centric transactions

One of the primary reasons why Nigerians are not adopting the eNaira is the country’s continued reliance on cash for transactions. As of 2023, cash remains the dominant form of payment, with over 90% of the money in circulation outside the banking system. 

Even with digital currencies gaining global traction, cash transactions still prevail in Nigeria, especially in rural areas. A 2024 report shows that only a small percentage of Nigerians actively use eNaira wallets. This stark contrast highlights the challenge eNaira faces in penetrating a culture deeply rooted in cash-based transactions.

Poor awareness and limited access to digital infrastructure

Another major obstacle to eNaira’s adoption is the lack of awareness among the general population. According to a survey, only a small fraction of Nigerians understand what eNaira is or how it works. Many Nigerians, especially those in rural areas, are unaware of its existence or its potential benefits. 

With a significant portion of the population relying on point-of-sale (POS) terminals for transactions, many POS operators themselves do not know how to handle eNaira transactions. This gap in knowledge and awareness is holding back the widespread use of the digital currency.

Additionally, the lack of digital infrastructure, such as reliable internet access and smartphone ownership, further complicates the situation. In 2022, it was reported that 68% of Nigerians in rural areas lacked access to smartphones, which are essential for using the eNaira wallet. 

While the CBN attempted to address this by introducing a shortcode for non-smartphone users, the shortcode has been largely ineffective, leaving millions of Nigerians without a viable way to access the eNaira platform.

Technical issues and platform failures

Technical issues have also played a significant role in hindering eNaira adoption. Many users have reported difficulties in opening eNaira wallets, citing problems such as the failure to receive one-time passwords (OTPs) needed for registration. 

This technical glitch has caused frustration for potential users, with some giving up on the platform altogether. These issues with registration, coupled with a lack of effective customer support, have only added to the frustration surrounding eNaira.

Lack of regulatory framework and infrastructure

For digital currencies to thrive, they require a solid regulatory framework and supporting infrastructure. In Nigeria, the regulatory landscape for digital currencies is still evolving.

While the Securities and Exchange Commission (SEC) recently approved the use of digital currencies, much work remains to be done to create a comprehensive regulatory environment that can foster the growth of eNaira and other digital currencies.

Furthermore, the financial infrastructure to support seamless digital transactions is still underdeveloped. Despite Nigeria’s leadership in launching a sovereign digital currency, the country still faces challenges with its payment systems, including the slow adoption of automated teller machines (ATMs) and the limited penetration of internet banking and mobile payments. 

These gaps in infrastructure contribute to the limited acceptance of eNaira.

Challenges to financial inclusion

One of the key promises of eNaira is to drive financial inclusion, particularly for underserved populations in rural areas. However, for eNaira to be truly inclusive, it must be accessible to everyone, including those without access to smartphones, the internet, or formal banking services. 

Unfortunately, the current system is not designed to cater to the needs of Nigeria’s informal sector, which remains the backbone of the economy. The lack of effective outreach to these groups, combined with the absence of a regulatory framework to support eNaira, means that many Nigerians are not benefiting from the digital currency.