How digital divide threatens eNaira’s mass adoption

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Months after the inauguration of eNaira by the Central Bank of Nigeria, hope for its mass adoption appears very dim, SAMI OLATUNJI writes

The eNaira introduction on October 25, 2021, made Nigeria one of the first countries in the world to develop a central bank digital currency, that is available to the public. Africa’s most populous nation joined the Bahamas and the Central Bank of the Eastern Caribbean on the coveted list.

The eNaira is the digital equivalent of the paper currency issued by the Central Bank of Nigeria. The digital currency, which is a pure complement to the naira, has the same value as cash. Contrary to the common assumption, the eNaira is not a cryptocurrency like Bitcoin, Ethereum, Dogecoin or any other sort of cryptocurrency, which has been restricted by the CBN. It is not decentralised and cannot be privately controlled in the same way as cryptocurrencies. However, the eNaira, like other similar currencies, is built on blockchain open ledger technology, which guarantees that a CBDC holder will never have a duplicate or counterfeit note. This is because each eNaira note is unique.

During the launch, the CBN Governor, Godwin Emefiele, stated that the eNaira was presented after four years of research by the apex bank. The CBN defines the eNaira as a digital currency denominated in naira that serves as a medium of exchange and a store of value.

The CBN governor claimed that 33 banks were successfully integrated into the eNaira network, with the apex bank minting N500m for the currency’s inauguration. The regulator said N200m had been issued to financial institutions and over 2,000 customers had also been on-boarded as of the time of the launch.

The CBDC speed wallet app and merchant wallet were made available for download once eNaira became operational. As of December 2021, the eNaira consumer wallet had over 583,000 downloads, while the merchant wallet had 83,000 downloads from over 160 countries. According to the CBN’s Controller, Enugu branch, Ch’Edozie Okonjo, the apex bank has recorded over 34,000 transactions worth N188m using the wallets.

Despite high hopes and publicity around CBN’s eNaira, major retailers and sellers in the country have refused to accept it four months after its launch, according to The Punch in a report in March this year. Visits to the Federal Capital Territory businesses such as Shoprite and Spa revealed that the proprietors had no knowledge as to how the digital currency functioned. Cashiers at ShopRite and Spar, who spoke on the condition of anonymity because they were not authorised to speak on the matter, stated they were ignorant of the eNaira’s existence or how it would function. Calls to e-commerce behemoths, Jumia and Konga’s customer service lines, revealed that eNaira payment was not available on these platforms.

According to a quick poll performed by Ventures Africa, only four per cent of respondents have used the eNaira. What is more concerning is that 64 per cent are utterly ignorant of it. Ventures Africa also questioned and sampled POS merchants, who had been significant drivers of financial inclusion throughout the country. Sixrt-seven per cent of respondents had never heard of the eNaira, and just 16 per cent had downloaded the wallet, none of which had been used. Retail merchants and traders felt the same way. Only 30 per cent of those interviewed had heard of the eNaira, and none had used it. According to the survey, even bank workers, who were the primary distributors, were not fans of this currency.

Months after its launch, the future of the eNaira seems bleak owing to low mass adoption. One of the factors contributing to this is Nigeria’s digital divide. The digital divide refers to the discrepancy between those who have access to modern information and communication technology and those who do not or have restricted access. This technology is seen in the telephone, television, personal computers, and internet connectivity.

 According to the Alliance for Affordable Internet, 88 per cent of Nigerians lack access to 4G-like Internet speeds or the capacity to use the Internet on a daily basis. This was announced in a study titled ‘Advancing Meaningful Connectivity towards Active and Participatory Digital Societies.’ According to it, just 12 per cent of Nigerians has meaningful connectivity, which is lower than South Africa (13 per cent) but higher than Ghana (seven per cent).

According to the A4AI recent report, urban users had more meaningful connectivity than rural users, and males were more likely to have it than females. According to the survey, people with meaningful connectivity had better access to information, were more likely to be economically active, used their phones to make purchases, accessed developmental activities, were more socially active and politically conscious.

The Federal Ministry of Communications and Digital Economy said in the appendix of its ‘Nigerian National Broadband Plan 2020–2025’ document that 31.156 million Nigerians lived in areas with no communications connectivity. According to the ministry, unserved regions were locations with no service provider coverage. It also disclosed that there were 207 clusters without network service in 2013, which had now been reduced to 114 in 2019.

Nigeria has the most Internet impoverished people in the world, according to the World Data Lab’s Internet Poverty Index. Internet poverty affects 47.39 per cent (103.02 million people) of Nigeria’s 217.37 million people, according to the Index.

Although the CBN has said that Nigerians without Internet-enabled phones will be able to transact in eNaira utilising the Unstructured Supplementary Service Data approach, apps have been the predominant form of transaction. This highlights the risk of the digital divide in the mainstream adoption of eNaira.

Omaplex Law Firm acknowledged this digital divide when it indicated that the eNaira’s acceptance across the country was threatened largely by poor mobile networks and a scarcity of internet-enabled devices.

The report, which was titled ‘Omaplex 365: Nigeria 2022 socio-economic and technological outlook’, noted that, “This is so because in most rural regions of Nigeria, network penetration is still heavily dependent on 2G and 3G networks, which spell difficulty for eNaira transactions hinged on the Internet.

“Again, owing to the indigent status of a significant fraction of the Nigerian populace, owning Internet-enabled devices may be put on hold in favour of more immediate necessities. Accordingly, if the primary stated purpose of the creation and launch of eNaira is to promote financial inclusion, the highlighted issues may pose a threat to achieving that goal.”

The eNaira was founded only a few months after China began experimenting with CBDC, the digital yuan. In this case, however, China’s execution is more strategic. It has been a year since it started and it is still in the pilot stage. However, it is not yet open to the public. The digital yuan was used in more than $8bn in transactions in various Chinese cities in the second half of 2021. As of January, it had over 260 million users.

China’s goal is to not only progressively introduce the digital yuan but also to properly integrate it into the lives of its people. Chinese people, for example, may use the digital yuan to conduct transactions on WeChat, the country’s most popular social media platform. China then carried it to the Beijing Winter Olympics, where it traded over 2m yuan per day. China has clearly worked hard to guarantee that its citizens may use the digital yuan in their daily lives. Unlike China, Nigeria’s mobile technology sector is still in its early stages. Therefore, it is essential that the CBN pursue a more comprehensive approach in order to build a CBDC, and this entails ensuring that the digital divide is reduced, financial analysts say.

A  former President of the Association of Telecommunication Companies of Nigeria, Teniola Olusola, urged the government to fully embrace digitisation in its processes and operations in order to encourage greater adoption of the eNaira, which, he said, was critical in the country’s transition to a digital economy.

He said, “And I believe that for the eNaira to be fully adopted, the government has transformed itself from the analogue systems that are currently used to fully adopting e-governance to carry out its processes and also engaging citizens.”

The International Monetary Fund in its Regional Economic Outlook for Sub-Saharan Africa urged Nigeria to invest in digital infrastructure in order to harness the benefits of eNaira.

An ICT expert and Senior Partner of e86 Limited, OluGbenga Odeyemi, affirmed that the existing digital divide would affect the adoption of eNaira.

He, however, said that those in rural areas need more than just Internet and Internet-enabled phones as many of them were still struggling with poverty, inflation and unemployment.

Odeyemi said, “I agree that the lack of Internet and smartphone devices and all will affect the adoption of eNaira. I also agree that the adoption of USSD will also increase adoption but the reality is those in the rural areas will probably need more than just the Internet and Internet-enabled devices. I don’t that the primary problem of those in the rural area is eNaira. They don’t even have the physical naira to start with.

“At this point, everybody is grappling with inflation and lack of jobs. The government has to do all it can about adoption but we have to be realistic about the category of people that the eNaira is meant for at this time and how far it can go.”

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