Despite government incentives, Nigerians criticize the country’s digital currency and seek resumed access to paper currency.
In Nigeria, residents have gone to the streets to protest the nation’s cash scarcity and their government’s introduction of a digital currency issued by the central bank (CBDC). The scarcity was caused by currency limitations aimed at transforming the economy into cashless one. Nevertheless, rather than embracing the CBDC, Nigerian demonstrators are demanding the return of paper currency.
The country’s history demonstrates that the typical citizen realizes that CBDCs severely threaten financial freedom without delivering unique benefits.
In recent years, CBDCs have gained favor among central bankers, policymakers, and consulting companies, which is no secret. For residents, though, it has been a different tale. More than two-thirds of the people who responded to the U.S. Federal Reserve’s request for feedback on CBDCs expressed worry about the potential threats to financial privacy, individual liberty, and the strength of the banking system.
Furthermore, CBDCs do not contribute anything fresh to the market regarding customer advantages. Several currencies are accessible digitally via debit cards, payment applications, and even prepaid cards if desired. This should be evident from Nigeria’s poor CBDC acceptance rate, where less than 0.5% of the population has used it. In context, more than fifty percent of Nigerians have used cryptocurrencies.
Even though the Nigerian government has tried several strategies to increase adoption, none have succeeded. In August of 2022, access limitations were relaxed such that bank accounts no longer needed the CBDC. Later, in October, it provided discounts for taxi rides paid for using CBDC.
Admittedly, the government of Nigeria did not learn its lesson and instead instituted even stricter regulations, including a ban on cash transactions.
To “restore the authority of the Central Bank of Nigeria (CBN) over money in circulation” and to “further intensify the drive towards a paperless economy,” the Nigerian government also decided to redesign the currency during this period.
As a result, not only are residents restricted in the amount of cash they may withdraw, but commercial banks also lack cash since many are still awaiting the arrival of the newly designed currency.
With these limits in place, the Nigerian government was able to deplete the economy of currency and pave the way for the CBDC’s moment of glory.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.