Nigeria upgrades CBDC as crypto restrictions cripple fintech industry

Nigeria upgrades CBDC as crypto restrictions cripple fintech industry

The Central Bank of Nigeria is moving forward with plans to upgrade Nigeria’s central bank digital currency (CBDC). This will allow it to be used for a wider range of goods, services and products. The country’s fintech sector is also being crippled by its strict crypto restrictions.

According to Vanguard, Bariboloka Koyor, CBN Branch Controller, spoke at a campaign to “sensitize businesses to the eNaira” at a Lagos market on May 9, according to a Vanguard report. Koyor said:

“Starting next week, the eNaira speed app will be upgraded to allow for transactions such as payment for DSTV or electric bill or flight tickets.

Koyor stated that the upgrade was designed to simplify onboarding. He praised its wallet, which had no fees and was quicker than internet banking. Koyor stated that the eNaira would be the only way for the government to provide financial assistance in the future and highlighted the benefits of early adoption.

“This project has been rolled out by the CBN to reach all Nigerians in terms of financial inclusion and efficiency, reliability and safety of bank transactions so that banking transactions can be done very quickly and safely, and that Nigerians can benefit from the eNaira.

Over 209% has been lost in value over the last six years, which has encouraged Nigerians to embrace crypto. A KuCoin crypto exchange report in April revealed that 33.4 million Nigerians had traded or owned cryptocurrencies over the past six months.

After the October 2021 launch of eNaira, restrictions on cryptocurrency trading in the country were tightened. In February 2018, the CBN prohibited banks from servicing crypto-exchanges. However, real enforcement came in November 2021 when two crypto traders were ordered to be blocked by the CBN.

The crackdown saw commercial banks in the country monitor their customers’ accounts to look for signs of cryptocurrency trading, which could lead to fintech companies being flagged.

In an April report, jointly published by the Secretary-Generals of the Organisation for Economic Co-operation and Development and the United Nations (UN), the restrictions on trading were cited as cause for concern.

Related: A bill is passed in the Central African Republic to regulate crypto-use

The report examined the urbanization of Africa. It stated that young Africans who work in the technology sector, “creating apps and trading digital currencies”, were at risk due to arbitrary government policies. The report highlighted Nigeria as an example and stated:

“The Nigerian restrictions on cryptocurrency transactions have hampered foreign direct investment in the fintech sector and negatively affected millions of young Nigerians who make a living from it,” said Mr. However, many have found ways to legal bypass these restrictions and continue their business, effectively depriving Nigeria of the transaction fees and taxes that otherwise would be paid.

Recent research has shown that CBDC adoption is not slowing down. Almost 80% of central banks are considering CBDC. Officials from Tanzania stated that they are moving at an accelerated pace with their CBDC plans on May 10.

Florens Luoga, Bank of Tanzania Governor, stated in a Bloomberg interview, that Tanzania sent officials to countries with CBDC experiences, including Nigeria, to learn directly from them, citing concerns about “cryptocurrency speculationators”.

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