While Nigerians have appeared to seemingly embrace the Central Bank of Nigeria (CBN) digital currency, sceptical analysts believe a lack of trust in the government will eventually hamper the e-naira’s chances for success.
Some analysts insist that the central bank digital currency is already in a shaky position and is made worse by the fact that it has to compete with fintech startups in the country. Nigeria as it is known is the dwelling of some of the biggest fintech startups and is a country that receives a relatively large number of Africa’s fintech investments.
According to a report from Financial Times, it is the threat of well-funded fintech firms that raises questions and doubts about the e-naira’s chances of fulfilling some of the CBN’s objectives like bringing more people into the financial system.
One of the analysts who is quoted in the report casting doubt about the success of the e-naira is Adedayo Ademuwagun, an analyst at Songhai Advisory. According to Ademuwagun, most of the purposes that the CBN strives to achieve have already been addressed by privately-owned fintech startups.
He stated that “the issue is that all of this can already be adequately addressed using the existing financial payments system. Nigeria is the fintech capital of Africa, so there are just so many options, so many ways to pay somebody and pay them fast already.”
However, Ronak Gadhia of EFG Hermes, who is also an analyst, thinks the notion that the government will monitor all naira transactions may be enough to discourage some from using e-naira.
He explained that with the e-naira the government will be able to know every transaction you carry out and in a place like Nigeria where there is distrust between the ordinary citizen and government, there may be scepticism in the adoption process.
To buttress his point, Gadhia referred to how the Nigerian government was able to strangle the End Sars protest by simply freezing the bank accounts of individuals that had orchestrated the protest.
Despite the many doubts about the e-naira’s success, however, Gadhia insists it is still too early to dismiss the digital currency’s potential.
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