Last week, the Central Bank of Nigeria’s (CBN) governor, Godwin Emefiele, was suspended and subsequently detained after falling from grace with the country’s newly-elected president, Bola Tinubu. The ousting leaves Nigeria’s central bank digital currency (CBDC) project facing an uncertain future, as the eNaira has failed to gain traction despite the former governor’s best efforts to promote its widespread adoption. The new president wants to revert the central bank’s recent unorthodox policies, which might include revisiting the country’s CBDC rollout.
Governor’s recent suspension
Mr. Tinubu ousted Mr. Emefiele a mere ten days after taking office. Hours later, the former central bank chief was taken into custody on various criminal investigations, with allegations ranging from breaches of mandate to fraudulent financial activities. His independence had been questioned after his attempts to run for president last year while still in office, in violation of electoral and central bank rules. He has since been replaced by Folashodun Adebisi Shonubi, one of his deputies.
The news casts doubts over the future of the country’s CBDC initiative, which had been a pet project of the now-suspended governor, but had seen mixed results at best. Local sources say the eNaira is “unlikely to be continued – at least with the same fervor as Emefiele.”
“It may move to the back burner, but I don’t see it being killed outright; it is a public initiative with global attention,” Emeka Ajene, a fintech expert, told Business Day.
eNaira’s mixed results
It is no secret that the public did not greet the eNaira with the enthusiasm that the CBN expected. Many people have been weary of the central bank’s intentions due to a 2021 ban on cryptocurrencies, which placed restrictions on banks and other service providers to discourage the adoption of alternative forms of money. Despite some initial success, adoption has generally been “disappointingly low,” as a recent IMF report noted.
However, the eNaira has also seen some success. That same IMF report highlighted the CBDC’s promising potential for government aid programs and cross-border remittances. However, the new President is keen to reduce intervention, meaning these programs could be slashed.
In March, transactions surged by 63%, albeit due to the country’s recent cash shortages caused by the controversial withdrawal of old banknotes. And the CBN has tried to make the eNaira easily accessible with feature phones to pursue its financial inclusion target.
More broadly, the new president will likely reverse many of the former governor’s controversial economic policies. The Financial Times reported Mr. Tinubu saying that “monetary policy needs thorough housecleaning,” referring to the country’s multiple exchange rates, cash shortages, and intervention.
Even the launch of the CBDC was unorthodox. Everyone assumed it was a pilot, but it was declared as “live” on its first unveiling.