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Nigeria: First African Country to Enter World of Digital Currency

Nigeria: First African Country to Enter World of Digital Currency

Wednesday, 27 October, 2021 - 06:00
The Nigerian president said the new digital currency would improve cross-border trade. Reuters

Nigerian President Muhammadu Buhari launched the country's new digital eNaira currency on Monday as Africa's largest economy looked to tap into the growing popularity of virtual money and cryptocurrencies.

"We have become the first country in Africa and one of the first in the world to introduce a digital currency to our citizens," Buhari said at the official launch.

The president said the new digital currency would improve cross-border trade, financial inclusion for people outside the formal economy and increase remittances, hoping the Nigerian Central Bank's adoption of the digital currency and its basic technique could boost the country's GDP.

Nigeria has seen booming interest in cryptocurrencies as people look for ways to avoid the weakening naira currency and combat high costs of living and unemployment in Africa's most populous country. According to Bloomberg, the new digital currency could help push more individuals and businesses to the public sector.

"The central bank plans to issue a new digital currency to operate alongside the other currencies and not to replace them," stated Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) in a press release in July. "Some bank accounts will be converted to digital currency," he told Bloomberg, adding that using traditional currencies is declining all over the world and not only in Nigeria.

Meanwhile, the governor stressed that the CBN digital currency policy still applies, and cryptocurrency brokers will not be allowed to use the infrastructure of the banking industry.

Five countries have already launched CBDCs, with another 14 including Sweden and South Korea in the pilot stage, according to the Atlantic Council's CBDC tracking project.

For her part, Nigerian Finance Minister Zainab Ahmed said her country will slow its borrowing activity within the three coming years in order to address the growing concerns of increasing debts.

Bloomberg quoted the minister during an economic summit held in Abuja, saying: "During the pandemic, our country debt has grown more than it was planned."

Nigeria is expected to exceed the 3 percent legal limit in its expenditure plan because of the increasing borrowing aimed at funding an approximately $40 billion budget for 2022.

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