From Uche Usim, Abuja
Ahead of the second anniversary of the Central Bank of Nigeria sponsored eNaira, the nation’s digital currency, a report from the Central Bank of Nigeria (CBN) has highlighted inherent drawbacks in the scheme that are hampering financial stability, despite its capability to deepen financial inclusion.
According to the report titled: “Economics of Digital Currency”, the apex bank said there are concerns due to the conversion of bank deposits into eNaira which can no longer be used for lending activities.
“Since its inception, bank deposit conversion to e-naira stands at an average monthly growth of 78.3 per cent and totalled about N1.66billion ($2.1 million).
“Furthermore, eNaira in circulation as a ratio of average banking system liquidity has averaged 0.1 per cent, reaching highs of 0.2 per cent in May and August 2022,” the CBN report noted.
It added that the eNaira has a high propensity to negatively affect banks’ overall profitability via shrunk non-interest income, just as it is susceptible to heightened risks of cyber attacks.
Banks are worried that funds converted by customers into eNaira are held within wallets domiciled with the CBN, robbing them the room to use them for lending activities by deposit money banks.
While the new digital currency has been applauded by experts and stakeholders for helping to reduce the financial inclusion gap, they have called for aggressive education and sensitisation, especially in rural areas to deepen its adoption.
As of December 2021, the CBN minted a total of N2 billion in eNaira.
As tongues wag over the new concept, its slow growth has been attributed to the slow adoption rate among individual users, evident in the low number of active consumer wallets, totalling 10,420. The report revealed that the number marked an improvement from previous months, reflecting 187,190 wallets activated for use as of July 2022.
There are also calls to fortify it to ensure ignorant users are not scammed.
eNaira was unveiled almost two years ago by former Governor of the CBN, Mr Godwin Emefiele at the presidential Villa, Abuja.