eNaira: IMF scores eNaira low on adoption in new report

The IMF report shed light on the challenges faced by the eNaira project one year after its launch, emphasizing the need for additional measures to enhance its adoption. The report emphasized the importance of building public trust and improving technological reliability, for the success of the eNaira project.

Despite the absence of a major risk factors, such as large-scale cybersecurity events, the IMF report acknowledged the Central Bank of Nigeria’s (CBN) success in maintaining uninterrupted 24/7 operations of the eNaira.

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However, the report highlights the sluggish take-up of digital currency by both households and merchants.

Findings of the report

One of the key findings outlined in the report is the slow growth in eNaira wallet downloads among retails users. Although there was an initial surge in downloads, reaching 500, 000 units a short period, subsequent progress has been slower.

It took an additional 63 days to reach 600, 000 units and a further 143 days to reach 700, 000 units as of end-November 2021, the total number of retail eNaira wallets stood at approximately 860, 000, which accounts for only 0.8% of Nigeria’s active bank accounts.

The IMF report also revealed that majority of eNaira wallets remain inactive, with only a limited window of heightened activity observed. On average, there have been around 14,000 eNaira transactions per week since the currency’s inception, representing a mere 1.5 percent of the total number of wallets.

While acknowledging the challenges faced by the eNaira project, the IMF report also noted that it is still too early to pass final judgment on its fate.

Moreover, eNaira faces tough competition from well-established incumbent networks, such as mobile money, which offer similar services with broader acceptance.

What CBN is doing to increase adoption

In response to the low adoption rates, the CBN has entered phase 2 of the eNaira project. This phase aims to broaden the coverage of the digital currency by including individuals without bank accounts but with mobile phones and valid Know Your Customer (KYC) information.

Lastly, the IMF report emphasizes that the success of the eNaira project depends on the breaking the low adoption equilibrium by employing clever strategies and a bit of luck.

Building public trust in Nigeria’s monetary system and addressing concerns regarding the eNaira’s technological reliability are crucial tasks that need to be tackled.