Nigeria: the e-Naira or the merit of monetary and financial innovation

October 25, 2021 marks a decisive step for Nigeria in the popularization of electronic payments with the launch of e-naira, the digital version of its currency. An important phase for the promotion of financial and banking inclusion with multiple challenges, among others, the facilitation of transfers abroad, the support for the local currency which faces a constant depreciation, but also and perhaps more fight the growing influence of cryptocurrencies like bitcoin, whose control remains difficult.

Beyond a monetary and financial innovation, the launching ceremony of the virtual currency under the auspices of the President of the Republic, Muhammadu Buhari, explained the authorities, demonstrates the interest represented by this financial change to consolidate Nigeria. at the head of the continent’s most powerful economies.

The most populous country in Africa with more than 200 million consumers, Nigeria is the continent’s largest economy with a gross domestic product (GDP) of $ 432.3 billion in 2020 for an annual rate of change of 2.5 %, reports the World Bank. Annual growth certainly attenuated by the health crisis linked to the coronavirus which caused it to drop to -1.8% in 2020. Despite this negative impact on the production tool, the country is already positioning itself for the post-Covid economic recovery with a projected growth rate of 1.5% in 2021 and 2.9% in 2022 on the basis of an expected recovery in prices and production of crude oil of which it is one of the main producers and exporters on the continent .

Situating the economic context that is launching the virtual currency, the Nigerian government has indicated that the new digital currency promotes “simple, free and secure payment, under the control of the Central Bank” and will facilitate payments for people without no access to traditional banking systems. In addition to tackling a worrying ubiquity of cryptocurrencies, the launch of this currency should give a boost to the naira facing a depreciation of prices. However, given the economic peculiarities of the international monetary system and the specificity of the monetary environment in Nigeria, it is difficult to predict whether the inclusion sought will achieve the expected objectives. It seems all the more complex for Nigeria, which, after the United States and Russia, becomes the third country in the world to adopt virtual currency.

While waiting to make an assessment in the coming months, this African giant already has the merit of joining the big leagues, of showing the way for financial innovation in Africa, thereby demonstrating an Africa that dare and for which only daring initiatives will enable it to register for long-term growth, a necessary step towards its emergence.

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