Nigeria’s Central Bank Boosts eNaira With NFC Technology

As a major economic giant on the continent, Nigeria holds a strong place within Africa’s rapidly expanding technological landscape. While the country’s many troubles are well-documented, Nigeria continues to make significant strides to upgrade its technological architecture. Nevertheless, despite recently adopting its own digital currency, eNaira, there are doubts about its long-term sustainability.

The Nigerian Technological Landscape

In Nigeria, various organisations and startups in the private sector spearhead the push for a digital economy. Like many others on the African continent, the country is a developing economy. Despite its enormous potential, various socio-cultural and political factors have made adopting digital technologies slow nationwide. However, the technological wave washing over much of the country has dramatically helped. Despite struggles with achieving world-class digital infrastructures, various tech startups have sprung up, offering working digital solutions in multiple industries, including logistics, human resource management and money transfer. With high-value tech brands like Flutterwave and Paystack leading the way in the private sector, the onus is on the government to formulate policies and create fertile ground for more tech-oriented companies to thrive.

Read More: Musk’s AI Startup Launched: A Peek Into His Net Worth

Technological Advancement and the Nigerian Government

Not to be outdone by leading elements in the private sector, the Nigerian government continues to allocate funding for digital technologies as the push for an all-around digital economy gains momentum. Although significant foreign investments have been made to expand broadband infrastructure, the potential of many other technologies, including artificial intelligence, machine learning and blockchain technology. 

Nigeria’s Blockchain Policy

For years, the Nigerian government has been openly anti-blockchain technology, going as far as to instruct banks to freeze accounts of individuals suspected of carrying out crypto transactions. Meanwhile, unofficial statistics hold that Nigeria has the fourth-highest number of crypto users, only behind the United States of America, India and Pakistan. With such widespread use of crypto and blockchain technology, a nationwide ban seems ineffective in regulating its use. The government appears to have realised this, with the Central Bank of Nigeria recently rolling out plans for its new blockchain-based eNaira.

Read More: Ripple’s UK Crypto Licence Application: Breaking New Ground

Adopting Blockchain Technology: eNaira and the Central Bank of Nigeria

Despite its staunch anti-crypto stance, the trajectory of the CBN’s recent policies offers hope to blockchain users and startups that the government may eventually relax its stringent rules on crypto use. eNaira is the country’s new CBDC (Central Bank Digital Currency) and has been used since 2021. Nevertheless, adoption rates have so far been well below expectations, prompting a revision to explore options to drive usage. In an official announcement in early May 2023, the FMCDE (Federal Ministry of Communications and Digital Economy) announced the approval of a national blockchain policy. The move was initiated to facilitate the development of the country’s digital economy and increase the citizens’ trust in digital platforms and blockchain-based technologies. Ironically, although eNaira is based on blockchain technology, the country’s blockchain policy remains strictly anti-crypto.

Upgrading eNaira

In another move that indicated that the country was moving, albeit slowly, towards crypto adoption, the Central Bank upgraded the CBDC mobile app with Near Field Communication (NFC) technology. The integration of NFC technology enables digital payment terminals and mobile devices to interact within range and carry out contactless eNaira transactions. eNaira already has QR code integration, and the new NFC feature is expected to prove vital in improving its adoption rates. 

Related: AI in Finance: Predictive Analytics and Robo-Advisors in the Financial Sector

Conclusion

The eNaira upgrade has been hailed as a step forward in the journey toward comprehensive blockchain adoption. Nevertheless, experts have noted that the initiative is driven more by a need to resolve the country’s dollar shortfall rather than geared towards financial inclusion. Still, given the continued defiance of the country’s citizens, as they continue to carry out anonymous, borderless transactions with Bitcoin and altcoins, it is only a matter of time till cryptocurrencies become crucial to the country’s monetary policy.

Frequently Asked Questions

Why Has the Nigerian Government Banned the Use of Crypto?

Despite widespread use, cryptocurrencies remain officially banned in Nigeria. The CBN has warned local financial institutions against dealing in crypto-based assets or facilitating payments for crypto exchanges citing concerns over terrorism financing, cybercrime, market volatility and laundering as primary motives for its decision.

What Is NFC Technology?

NFC stands for Near Field Communication, a technology based on short-range wireless connectivity. It leverages magnetic field induction to facilitate communication between devices when they’re within proximity of one another. This includes transferring small files, enabling physical access, and authenticating credit cards and other wireless links.

Will Nigeria Fully Adopt Crypto in Future?

Currently, crypto use is banned in Nigeria, with all financial institutions obliged by the Central Bank to freeze the accounts of individuals suspected to be involved in crypto-based transactions. Nevertheless, the introduction of eNaira and the new blockchain policy indicate that the country will ease its stringent rules on crypto over time, paving the way for crypto adoption.