Nigeria is in talks with potential technology partners to develop a new system to run and manage its central bank digital currency, the eNaira.
(Bloomberg) — Nigeria is in talks with potential technology partners to develop a new system to run and manage its central bank digital currency, the eNaira.
The Central Bank of Nigeria wants to develop its own software for the digital currency so that it can keep full control of the effort, according to two people familiar with the matter who asked not to be named because the matter is confidential. It has discussed the plans — which are in the early stages — with New York-based technology firm R3, one of the people said.
Bitt Inc., which has offices in Draper, Utah, helped the West African nation issue its central bank digital currency, or CBDC, in October 2021, making it the first country to deploy the novel form of money on the continent. A new partner won’t take over Bitt’s job immediately, but would help the central bank meet its long-term aspiration to control the underlying technology, the sources said.
A central bank spokesperson didn’t respond to a phone call or text messages seeking comment. A spokesperson for R3 declined to comment. Bitt in a written statement said it is “is aware that our partner, the CBN, works with various service providers to explore technical innovations for their digital infrastructure.” The company added that it continues to work closely with the Nigerian central bank and is “currently developing additional features and enhancements.”
Read more: Digital-Currency Plan Falters as Nigerians Defiant on Crypto
Nigeria has been among countries at the forefront of initiatives to establish and support blockchain-based digital versions of their hard currencies — and like most of them, it has struggled to win wide adoption. Still, numerous central banks around the globe are crafting similar efforts. Their ambitions are driven by the need to keep up with private-sector innovations in digital payments, which have pushed consumers to go cashless and led to the creation of cryptocurrencies and stablecoins.
Read more: Why Central Banks Got Serious About Digital Money: QuickTake
Officials at the Bank of England and the UK Treasury have stepped up work on a digital pound, informally dubbed “Britcoin,” noting that the proposed CBDC could present significant opportunities for British consumers and businesses. The European Central Bank is studying how a digital euro could be designed and distributed, and what impact it could have on the market. It plans to decide whether to actually develop a digital currency at the end of the investigation phase in October.
Critics of CBDCs have raised concerns that the tokens are a solution in search of a problem, could destabilize commercial banks and would exclude those consumers and businesses that still rely on cash.
In Nigeria, only about one million people in a nation of more than 200 million had downloaded digital wallets to store the eNaira as of October and transaction volumes have been negligible, according to the central bank. The regulator is aiming to boost adoption through an eNaira redesign and cashless policy announced four months ago.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.