About a day after disappearing from Google Play, the eNaira app is back. But, still, it has been a rocky road for Nigeria’s central bank digital currency (CBDC). It was originally scheduled to launch at the beginning of the month. President Buhair premiered the eNaira, almost four weeks later on October 25, to the world with few media invitees and no questions allowed, according to a Reuters report. The president boasted that the new innovation could inject the economy with a needed boost of $29 billion in growth over the next decade.
In theory, Buhari is right. There is so much growth that could be attained with the rollout of a successful, well designed, well executed CBDC. Perhaps the greatest benefit is one which is difficult to quantify: advancing the populace, technologically speaking. That spark of interest created by the launch of a CBDC could be a driver to increase interest in advanced technological studies, and it could, slowly help build a tech friendly culture, which inspires foreign investment. Those are all reasonable things to which politicians can aspire when they launch a central bank-backed digital currency.
The problem has been in the execution. Perception is 80% of reality, and the perception is that Nigeria’s Central Bank simply does not have a handle on the project they’re moving forward. That’s a problem, regardless of whether the perception is accurate. There is a major education component involved in rolling out a CBDC. For any country, educating the public about the process and making them feel comfortable with a digital currency is, in many ways, almost as complex as building the technology itself. If the populace isn’t inspired to believe that the technology behind the CBDC is secure or able to handle the traffic associated with a national rollout, they will be hesitant to utilize it. And a CBDC that isn’t widely used won’t be effective in accomplishing any of those long-term goals.
Regardless of what happens in Nigeria, CBDCs will be useful for bringing a segment of the unbanked population into our financial system. Even more important for many citizens of West Africa, CBDCs could make international remittances much less costly and more accessible. That’s real value worth pursuing. And Nigeria jumped out first. They were almost forced to. They couldn’t afford, given their high inflationary issues, for their citizenry to be utilizing anything besides the Naira (or e-Naira) to transact commerce.
Downloaded over 100,000 times before disappearing from Google Play, it was said to be riddled with poor reviews which generally discussed a clunky experience for the user. A Nigerian news source noted that “findings revealed that the temporary removal of the app was due to the volume of visitor traffic, which insiders said necessitated a review of the app.” Yet, in the next sentence, it admitted that “the app for individuals was temporarily suspended to carry out an upgrade to make it much more effective and user friendly than the original app.” Those are two different things.
What is certain, at this point, is that the rollout of the Nigerian CBDC didn’t go according to plan, and it doesn’t appear that the country moved forward with a substantial beta test before releasing their product to the public. That likely means that there will be more bumps in the road. Ghana looks to be closer to releasing a CBDC than any other country in the region. Continued failures surrounding the e-Naira could give Ghana’s central bank an opening to launch a CBDC which is deemed to be more reliable and, in the long-term, more trusted. What Ghana, and other countries should learn from the Nigerian debacle is that it is better to do it right than to do it fast. There’s value to being first to market — but not at the expense of your product.
About Richard Gardner:
As CEO of Modulus, Richard has been a globally recognized subject matter expert for more than two decades, offering complex insight and analysis on cryptocurrency; cybersecurity; financial technology; surveillance technology; blockchain technologies; and general management best practices.
Over the past twenty years, Modulus has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.