Nigerian Cash Shortage Drives 63% Uptick in Digital Currency Use

A cash shortage in Nigeria has made the country’s digital currency much more popular.

The value of eNaria transactions has jumped 63% to 22 billion naira ($47.7 million), the head of the country's central bank told reporters Wednesday (March 22)

“The eNaira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions,” said Central Bank of Nigeria (CBN) Governor Godwin Emefiele, whose comments were reported by Bloomberg News.

Nigerians have opened around 13 million e-wallets, he added, a more than 12-fold increase in the last five months, while the amount of currency in circulation in Africa’s largest economy has fallen from 3.2 trillion naira down to 1 trillion naira.

As PYMNTS wrote last month, Nigeria’s cash troubles began when the country’s government announced it was replacing three high-denomination bills with currency that featured new, harder-to-counterfeit designs.

But when authorities reportedly failed to print enough bills, it caused people to scramble to withdraw cash from ATMs. Within days, many automatic tellers in Nigeria’s capital were empty, with reports of long lines of people hoping to get a hold of increasingly rare paper currency.

However, in his comments to reporters Wednesday, Emefiele said the increased adoption of the eNaira was partially due to the government’s use of the currency to pay poorer citizens for government aid. These citizens, he said, opened 4 million e-wallets.

The 13 million figure is a long way from the 700,000 Nigerians who had downloaded the digital wallet as of late October, when the CBN marked the one-year anniversary of the eNaria’s debut.

As PYMNTS noted then, Emefiele had earlier chastised banks for “apathy” in promoting the central bank digital currency (CBDC) to the nation’s 200 million citizens.

“From today, we are going to carry out this sensitization program through all the nooks and crannies of this country until eNaira is widely accepted,” a CBN official said at the ceremony.

Despite Nigeria’s struggles to get a CBDC off the ground, it’s still further along in its campaign than many other countries, including the U.S., where the idea of a digital currency is purely theoretical at this point.

It’s something the Biden administration has been studying, with officials saying it is a high priority, and something a potential challenger for President Joe Biden's seat has denounced.

Earlier this week, Florida Gov. Ron DeSantis — an emerging Republican presidential candidate for 2024 — called for a ban on CBDCs, saying the Biden administration effort was “about surveillance and control.”