Nigeria is becoming increasingly authoritarian in the matter of currency ?
With the official annual inflation rate of around 16%, Nigerians naturally try to find a better store of value than naira, and the Central Bank’s efforts to cut access to alternative currencies only exacerbates the problem.
In February the Central Bank of Nigeria (CBN) banned financial institutions from facilitating crypto-related transactions, and in July it halted the sale of foreign currencies to money changers and stop issuing new licenses to currency-trading companies.
The result? People are hoarding dollars, acquired on the black market, and crypto, acquired via P2P exchanges (Paxful registers an equivalent of $284M traded yearly in the country). Nigeria has one of the highest crypto adoption rates in the world (6th place in Chainalysis’ Global Crypto Ranking), and with its growing young population it can only go up.
This reasoning doesn’t stop the CBN from trying though. Earlier this month it ordered banks to close the accounts of people suspected of crypto trading and place their funds in suspense accounts.
Last month the CBN made the news by launching its CBDC, or Central Bank Digital Currency. ENaira is poised to provide faster and cheaper payments, and CBN’s technical partner Bitt has even announced a soon rollout of a special app designed for the unbanked.
This is all good, but eNaira changes absolutely nothing in the intrinsic weaknesses of naira, and by denying Nigerians the access to other currencies, and crypto in particular, the CBN only increases people’s distrust. And when people do not have trust in a fiat money, no ban can stop them from trying to protect their livelihoods ?