Nigeria at the forefront of digital banking money


Nigeria plays the forerunner in Africa with the introduction of a central bank’s digital currency from October 1, in a week and a day. Other African countries have similar plans to meet this new public demand.

Among them, Ghana, it enters the test phase in the coming weeks. South Africa and Morocco are still in the preparatory stage, as is BCEAO, the central bank of West African states. She also wants to develop a virtual currency that can be stored on her laptop via an application. This currency will mainly be used to pay for purchases; Advantage over cryptocurrencies that are rage in Africa: it will be as secure as the cash you put in your wallet, as it comes from a central bank.

Adequate asset to blow up private digital currencies Competition will be fierce. Bitcoin and its derivatives are popular among Africans. Since August, sub-Saharan Africa has been the region in the world where cryptocurrency exchanges are the most important, before North America. Faced with the risk of fraud, Nigeria has banned its banks from conducting bitcoin transactions. In vain: users now go through other channels to use this payment method. The flows of bitcoin between China and Nigeria are particularly intense. E-naira must therefore prove that it is as flexible as bitcoin.

E-naira will mainly be used to pay for purchases For this feature, it may be effective as merchants will be forced to accept digital payments, warned the Governor of the Central Bank of Nigeria. On the other hand, its function as a store of value is questionable. Naira (as well as the Ghanaian cedi), is a weak currency, subject to sharp declines. Its digital equivalent will have the same value. Value-preserving function is therefore not very satisfactory. Although bitcoin is very volatile, it retains the advantage at the moment. It also seems more competitive for money transfers abroad, an aspect of very important rules in Africa: sending money to a neighboring country is easy and to a western country almost impossible.

With encrypted currencies, transfers are also much cheaper. The commission is around 3% to 5%, while facilities that specialize in transfers take up to 9% of the transaction volume. It is therefore by developing this use that e-naira and its Ghanaian and other competitors will be able to gain the public trust. Nigeria is also trying to promote economic inclusion. Only 6 out of 10 residents have a bank account. In sub-Saharan Africa, the bank interest rate is even lower, around 10%. The central bank’s digital currency can therefore be a good tool for reaching new target groups. Especially the poorest, those who do not risk converting their meager savings to bitcoin for fear of losing everything.

Experience in other countries is crucial In Cambodia, where a currency of this type, Bakong, was introduced a year ago, it is a success that has helped facilitate the exchange between the city and the countryside. At present, no major western country has launched its central bank’s digital currency at the national level. The most advanced, China, takes its time before generalizing the use of its digital yuan; that is why Nigeria, the most populous country in Africa, neck and neck with South Africa for GDP, will be closely followed around the world.

IN BRIEF On the Hong Kong Stock Exchange, Evergrande shares rose 12% this morning. Confidence is returning, although it is still unclear whether the Chinese promoter on the verge of bankruptcy will be able to honor a planned repayment today. In addition, the Fitch agency has just revised down its growth forecasts for China due to a slowdown in the real estate sector.


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