As Nigerians continue to embrace different digital payment methods due to the continued cash shortage in the country, the Central Bank of Nigeria (CBN) disclosed that eNaira transactions have surged to 63%.
At the end of November 2022, the CBN said that the eNaira recorded 700,000 transactions valued at ₦8 billion, this has increased to ₦22 billion, per Bloomberg. About 13 million e-wallets have been opened since it was launched in October 2021, the report added.
"The eNaira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions," Godwin Emefiele, CBN's governor said. He attributes the surge to the use of the e-Naira to disburse aid via a national welfare programme.
The eNaira experienced a slow take-off after it was launched. In May 2022, only 2.3% of 86 respondents in a poll that we conducted said they have used the eNaira. In fact, the CBN in June 2022 launched a USSD code to boost the adoption of the digital currency.
Late last year, the CBN commenced the demonetisation of the most valuable Naira notes—₦200, ₦500 and ₦1000. The goal was to reduce the amount of cash outside the vaults of commercial banks, curb counterfeiting and reduce the crime rate in the country. On another hand, the policy was designed to enable the adoption of the CBN's cashless policy.
At the time, over 85% of Naira notes (₦2.73 trillion of ₦3.23 trillion) in circulation were outside the vaults of commercial banks, the amount of Naira notes in circulation has since dropped to about ₦1 trillion.
Since about 90% of transactions in Nigeria's informal economy are made in cash, the hurried implementation of this policy came with a cash crunch which led to protests and vandalisation of banks' physical assets because of the unsatisfied customers' queues inside banking halls and at ATMs across the country looking for new notes.
Getting cash through POS operators has since become a struggle. In fact, some agents charge 10x the fee for cash withdrawals as observed in Jos, North Central Nigeria.
In February, three states in Northern Nigeria–Kaduna, Kogi and Zamfara—sued the federal government, seeking the Supreme Court's order to halt the implementation of the Naira redesign policy.
However, the CBN maintained that the old Naira notes are no longer legal tender. To ease the supply pressure on citizens, Nigeria's President, Muhammadu Buhari approved the use of old ₦200 notes as legal tender. This move did not solve the cash crunch, many Nigerian residents turned to digital payment methods within this period despite challenges with poor networks and failed transactions.
Later in March, the Supreme Court ruled in favour of the states, stating that old Naira notes remain legal tender till December 2023.