Nigeria’s Central Bank (CBN) had recently stated that preparations are being made to test an independent digital currency for the purposes of easing restrictions pertaining to foreign remittances. To this end, an IT (Information Technology) specialist who works at the CBN, Rakiya Mohammed, recently announced that the bank is doing its best to ultimately introduce and implement a central bank digital currency (CBDC) into Nigeria soon.
Rakiya had revealed this to the public following the meeting of the Bankers Committee held on Thursday in Abuja. The specialist had stated that the CBN shall have a special announcement as well as potentially having a pilot scheme for CBDC implementation be launched before the year is over. The ability to bring the CBDC to Nigeria’s population had been highly emphasized, and so the CBN is doing all it can to make this happen sooner rather than later.
Digital currencies are coming despite the ban
The governor of the CBN, Godwin Emefiele, said last month that CBDCs shall be ‘coming to life’ within the country, despite the fact that there is still a ban. This is certainly an interesting take as the CBN had effectively banned financial institutions and commercial banks from being able to service various cryptocurrency exchanges back in February. This ban had been administered after claims of the cryptocurrencies being utilized for undesirable and illicit transactions had surfaced, however, these claims have since been debunked.
Also, as per Rakiya’s statement, the digital currency issued through the CBN shall be working alongside the naira cash notes, and will hence not be acting as a replacement. The specialist had even claimed that the CBDC will also be employed to potentially decrease the forex restrictions which are prevalent in Nigeria. These restriction policies had been what had initially triggered the massive spike in cryptocurrency adoption in the country.
Foreign remittances are crucial for Nigeria, as these remittances also account for the country’s biggest forex revenue (non-oil). This is because there are millions of the nation’s expatriate population currently residing abroad who all tend to support family members present back in Nigeria. According to figures provided by The World Bank., a whopping $26.4 billion in remittances had been generated and sent to Nigeria back in 2019.
Lastly, Rakiya had mentioned that the CBN has been considering the idea of introducing a CBDC for approximately 2 years now. Elsewhere, Ghana has plans of becoming the very 1st nation in Africa to launch a CBDC.