Nigeria’s Central Bank May Launch a Digital Currency Pilot this Year

Bukola Olanrewaju June 11, 2021 Banking and Finance, BUSINESS Leave a comment

Nigeria may launch a central bank digital currency (CBDC) by the end of 2021, according to a central bank official.

Speaking at an online news briefing on Thursday at the Bankers’ Committee meeting, the Director-Information Technology Department, Central Bank of Nigeria (CBN), Mrs Rakiyat Mohammed, said that the entity had been exploring a possible CBDC for over two years, according to local media reports.

“Before the end of the year, the central bank will be making [a] special announcement and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace,” Mohammed was quoted in Today, a local news outlet.

She said about 80 per cent of central banks in the world were exploring the possibility of issuing central bank digital currency and Nigeria could not be left behind.

Also Read:

For over two years now, she added, the CBN had been been exploring technology and had made tremendous progress.

Explaining what the Central Bank digital currency would be, she said there were currently two forms of money in the country.

She added, “We have in two forms in Nigeria as of now, there are the notes and there are the coins.

“So the Central Bank currency is to be the third form of money which means just as we have electronic money, digital money is not new in Nigeria.

“Just as we are about the third or fifth in the whole world as far as advancement in the use of digital money is concerned.

ALSO READ: Ecobank Seeks to Raise $300m from Debt Markets

She said the Central Bank was looking at different use cases such as remittances.

The director said, “We all know how money has to travel for someone to send money from Nigeria to abroad and it is a huge money in Africa.

“We also know that recent report by EfiNA was that our target was to achieve 80 per cent financial inclusion. We are about 60 per cent and at the rate at which we are going, we are not going to meet this target.

“Central Bank digital currency will accelerate our ability to meet this target.”

Nigerian authorities have been debating how to regulate the use of private cryptocurrencies in the country. Earlier this year, the CBN ordered all local banks to seek and shut down accounts tied to crypto platforms, although the governor of the bank later clarified that crypto trading is not banned in the country.

Meanwhile, cryptocurrency usage as a store of value and remittance tool is soaring in Nigeria, with Ray Youssef, the CEO of peer-to-peer lending platform Paxful saying last week that the African nation is its biggest market.

Mohammed said one reason for a CBDC would be to make it easier to transfer remittances into the country. Before the pandemic hit and caused a dip in remittances worldwide, Nigeria received more than $5 billion in remittances quarterly. Earlier this year, Nigeria set up a temporary rewards program to encourage international transfers to Nigeria.

The specialist also said that CBN will explore different technology options, engage various industry players and test the digital currency.

Mohammed reportedly said that the CBDC would complement cash, and that the CBN has looked at the architecture, accessibility and privacy issues of a digital currency, according to Today.