August 31, 2021/CSL Research

Earlier this year, the Central Bank of Nigeria (CBN) announced plans to issue the country’s digital currency amidst the growing adoption of digital currencies over the world, with many central banks also investigating the practicalities. Since then, the apex bank’s ambitious project to create a digital currency has continued to gain traction. Yesterday, the apex bank released a circular stating the formal engagement of a global Fintech company, Bitt Inc., as the technical partner for its digital currency, eNaira, expected to be launched later in the year.

Bitt, founded in 2013, is a financial technology company based in Barbados, providing digital currency solutions to financial institutions and Central Banks worldwide. The firm rose to prominence as it recorded a significant milestone through the successful conduct of the pilot program and launch of the Central Bank digital currency of the Eastern Caribbean Central Bank (ECCB), DCash, in April 2021. It is the world’s first Central Bank digital currency in a currency union, involving four countries – Antigua & Barbuda, St. Kitts & Nevis, St. Lucia, and Grenada.

With the successful launch of cryptocurrencies like Bitcoin, which store value but are not
managed by any central authorities, governments and Central Banks around the world have been exploring the possibility of creating their own digital currencies. Without a doubt, the eNaira would result in faster and less expensive cash movements, but it would require a lot of work and money to adopt its use. The most apparent downside for Nigeria would be the low level of mobile penetration and financial literacy in the country, which could deter a significant adoption of the eNaira. The Central Bank of Nigeria (CBN) recently issued preliminary guidelines to commercial banks for the proposed eNaira digital currency. From the document, the apex bank would conduct a pilot test of the national digital currency, initially launching in Lagos, Abuja, Port Harcourt, and Kano.