Nigeria, the first African power, launches its digital currency

To counter cryptocurrencies and cope with the boom in online payments, central banks are ramping up digital currency projects. As the UK and the European Union work on their own dematerialized currency, China became the first major economy to launch the trial version of a digital currency last year. On Monday, October 25, it will be the turn of Nigeria, the main power in Africa, to launch its eNaira. A small revolution since this state is powerful on the continent. It is the leading economy in Africa in terms of GDP and the most populous country on the continent (more than 200 million inhabitants). Ghana has also been testing its eCedi since September.

“The eNaira, therefore, marks a great step forward in the evolution of the currency and the CBN is committed to ensuring that the eNaira, like the physical naira, is accessible to all,” the country’s central bank said in a statement. .

The use of online payment booms in Nigeria

Unlike cryptocurrencies, issued in a decentralized way or by companies and whose security is guaranteed mainly by the cryptography used, and which escape all the controls of public institutions, central banks would maintain control over the digital currencies of central banks . This is the case with the new Nigerian currency.

This monetary activation takes place in a country where citizens are familiar with these new means of payment. In this former British colony, cryptocurrencies are widely used. This country is ranked in 2020 as the third user of virtual currencies in the world after the United States and Russia, according to a study by the specialized research firm Statista.

According to a World Pay report, “Nigeria is one of the most developed e-commerce markets in Africa.” The study continues: the country “is about to enter fully into the card payment revolution, and even shows signs of a direct transition to mobile payment methods.” And for good reason, the population’s smartphone equipment rate is estimated at 51% in 2020.

Even if Nigerians continue to favor cash payment when in stores, dematerialized payment is taking off. Mobile e-commerce is expected to grow 26% over the next five years.

In the last two years, it is young people who have driven the demand for cashless and frictionless payments, with electronic transfers being one of the main payment methods.

The dynamism of the market had allowed a Nigerian startup to sell for more than 200 million dollars to the American giant Stripe. In 2020, at the time of the acquisition of this Nigerian fintech specialized in online payments, its service was used by 60,000 companies in Nigeria and Ghana.

Fight against money laundering

ENaira, beyond meeting the new expectations, also aims to limit the use of very popular cryptocurrencies in this territory. With these decentralized currencies, Nigerians primarily seek to escape the constant depreciation of the naira in recent years. They also make it easier for them to receive diaspora money or take their savings out of the country.

But in recent years, the Central Bank of Nigeria has become concerned about the impact of cryptocurrencies on its economy, arguing in particular that they are used for money laundering and terrorist financing.

Attitude that not all countries share, quite the opposite. El Salvador, for example, has made Bitcoin legal tender. It is possible to pay taxes with this cryptocurrency.

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