While Nigerians have seemingly embraced the Central Bank of Nigeria (CBN)’s digital currency, skeptical analysts believe a lack of trust in the government will ultimately limit the e-naira’s prospects for success.
Fintech Startups Threatening You
In addition, some analysts insist the digital currency’s already tenuous position is made worse by the fact that it has to compete with fintech startups. As previously reported by Bitcoin.com News, Nigeria is home to some of the biggest fintech startups and is a country that receives a relatively large chunk of the continent’s fintech investment.
According to a Financial Times report, it is this threat from well-funded fintech startups that raises questions about the e-naira’s chances of fulfilling some of the CBN’s goals like bringing more people into the financial system or allowing for more targeted social and welfare spending.
One of the analysts who is quoted in the report casting doubts about the e-naira’s prospects of succeeding is Adedayo Ademuwagun, an analyst at Songhai Advisory. Ademuwagun said that many of the CBN goals for the digital version are being met by fintech companies. He explained:
All of these issues can be addressed with the current financial payment system. Nigeria is Africa’s fintech capital, which means there are many choices and many ways to pay someone, fast.
Trust issues
Ronak Gadhia from EFG Hermes believes the belief that all enaira transactions will be monitored by the government may dissuade people from using the currency.
“The government effectively knows every transaction you carry out [with a digital currency] and in a place like Nigeria where there’s a bit of mistrust between ordinary Nigerians and the government there may be skepticism in terms of adoption,” the report quoted Gadhia explaining.
Gadhia also supports his argument by pointing out how Nigeria’s government could suffocate End Sars protests simply by freezing bank accounts of those who had organised them.
Despite expressing his doubts about the e-naira’s prospects, Gadhia insists it is still too early to judge or dismiss the digital currency’s potential.
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