While Nigeria's currency, the Naira, continues to tumble, its national cryptocurrency, launched last October, the eNaira, is also in free fall.
This is bad news for the Central Bank of Nigeria (CBN), President Muhammadu Buhari, and the Nigerian state. The national cryptocurrency — the sixth in the world to be adopted by a state — continues to drive users away. Several factors explain the rapid fall of the eNaira, and it owes nothing to chance.
It all started with the removal of the eNaira Speed Wallet application, the cryptocurrency electronic wallet, from the Google Play Store just two days later. the launch of eNaira. A misunderstanding due to the negative opinions of users, far from being anecdotal. Because the bad-buzz initiated by Internet users to denounce the currency was deliberate. This was, for Nigerians, to signal that eNaira “represents the government”.
A misunderstanding that was resolved by Google 24 hours later. Too late, probably, as the CBN expected over a million people to subscribe to eNaira upon launch. However, there were barely 448 buyers at that time. Since then, the cryptocurrency has however managed to seduce Nigerians, who today are 000 to hold eNaira, for a total value reaching 738 million dollars.
Another problem: eNaira is only accessible in Nigeria or via Nigerian banks. However, this challenges the very essence of a cryptocurrency. Especially since the creation of eNaira by the CBN was intended to offer an alternative to other cryptocurrencies, prohibited in Nigeria. Despite this, over 34 million Nigerians are still using Bitcoin or Ethereum. And the government does not have the skills or the means to stop them.
The many limitations of eNaira
The country of more than 200 million inhabitants is extremely connected, and composed of a young population. And precisely, young people are intrinsically at odds with the federal state on all issues relating to digital. If the opinions were rather mixed during the exchange of arms between President Muhammadu Buhari and the boss of the social network Twitter last year, the ban on cryptocurrencies seems to be unanimously against it.
For the CBN, the restriction of cryptocurrency transactions fell under the fight against "several criminal activities, including the financing of terrorism and tax evasion". Insufficient, it seems, to convince young populations and entrepreneurs to abandon their Bitcoin wallets – even if illegal – for a cryptocurrency limited to national use. Because for currency exchange, eNaira users have to submit requests to their respective banks, even for receiving funds.
According to the director of the Nigerian office of Web3 technologies, Jennifer Echenim, “the adoption of eNaira looks like a failure before it has started”. The engineer explains this, above all, by the devaluation of the Naira. The national currency was worth 1 dollar for 360 naira in 2020. As of last Friday, the exchange rate is at 600 naira for 1 dollar.
“No proper research was conducted prior to the launch of eNaira,” Echenim complains. “For a currency to be valued, there must be demand. This is essentially what drives cryptocurrencies today. However, no one is looking to acquire eNaira. It is not even acceptable or usable outside of Nigeria. To build a digital currency on this is definitely a failure”, analyzes Jennifer Echenim, who believes that what is happening with eNaira is only “ the result of the restrictions imposed on other cryptocurrencies ».