Nigeria, earlier this year, officially launched its central bank digital currency (CBDC) named the eNaira. The Nigerian government has now banned weekly ATM withdrawals over $225 (roughly Rs. 18,565), aiming to promote the use of its CBDC among the masses. On a per day basis, the ATM withdrawal has been capped at $45 (roughly Rs. 3,710) in the African nation. Nigeria has become one of the first nations in the world to roll-out its CBDC in full force. Nations like China and India are still testing their respective national digital currencies.
Nigeria is looking to add the advance tech twist to its existing financial systems. Along with promoting the use of eNaira, the government is also pushing for people to use online payments and mobile banking.
“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, cards, eNaira, etc.) to conduct their banking transactions,” the Nigerian government said in an official statement.
Built on the blockchain technology, CBDCs work like cryptocurrencies, but unlike the largely untraceable and independent crypto transactions, CBDCs are issued and regulated by central banks.
Essentially, CBDCs are the virtual representation of fiat currencies, but because of the use of blockchain, the track records of CBDC transactions are more transparent and unchangeable as compared to traditional online transactions.
The Nigerian government is targeting to get over eight million people to adopt eNaira as a payment method in the coming months, the detail was disclosed in August by Godwin Emefiele, the governor of the Nigerian Central Bank.
The eNaira was launched on October 25. The CBDC garnered over 840,000 downloads in over 270,000 active wallets within the first few weeks of its launch.
As of two months ago, around 200,000 transactions worth over $9.5 million (roughly Rs. 75 crore) were recorded via eNaira.
Intending to expand the use cases of the eNaira, the government there is also looking to let people pay for their utility bills and ticket bookings via the CBDC.
The country plans to use the CBDC as a tool to include unbanked citizens into the financial system.