The Shift into Digitization of Money in Nigeria and the Potential Market for Crypto Merchants: Facts and Figures

Days ago, I shared my thoughts on Nigeria Central Bank's creation of eNaira. As long as most of the Nigerian educated population are not trusting the government's position on eNaira following the government's earlier attack on cryptocurrency traders and hodlers, the eNaira whitepaper made some salient revelations that caught my attention and is worth sharing.

First was the chart showing digital payments made by Nigerians between 2017 and 2019 which ran into Trillions of Naira. According to National Bureau of Statistics, the evolving payment landscape in Nigeria has fuelled the growth in digital payment (which include only NIP, PoS and Web transactions) with 2.7 billion transactions valued at NGN162.9 trillion as at 2020. This amount is 1.06 times larger than the size of the country’s NGN154.3 trillion 2020 GDP2 source. This shows how hungry the people are in terms of embracing digital technology which is believed could reduce the spate of corruption with traditional systems which lack accountability.

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Comparing the data captured above with the naira currency-in-circulation it is evident (chart below) that value of digital payments had far outweighed currency-in-circulation from 2017 to 2019. While the Nigeria's apex bank sees eNaira as being motivated by the statistics above, I think there's more than enaira can level for the economic good of Nigerians.

The shift from the use of cash to digital payments signifies a headline objective of the CBN towards fostering the development of a digital economy. However, cash still remains a core component of Nigerian society as currency in circulation has grown at a CAGR of 7% over the last 11 years. The CBN has tried to address these trends with numerous policy measures which have in part fuelled the rise in digital payments. The eNaira is as such another drive by the Bank to reduce cash usage but holistically to address other fundamental economic and policy objectives.

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Looking deeper, eNaira is just a direct equivalent of currency Naira and is not categorized as cryptocurrency according to CBN. It creates more worries as to why one should hold eNaira when it adds no value to the holder of an equivalent amount in bank. This makes one doubt the sincerity of the government in this creation and the shallowness of their knowledge of crypto and the profits it brings to just HODLers.

While I sense their push for crypto regulation, I also see a ripe market for crypto based merchandize in the country as the people are already getting interested in digital payments. With a token like Hive which provides feeless transactions, I'm certain that buyers would gladly buy as much as they want without the fear of transaction charges in addition to the prices of commodities. However, the stability of the token prices becomes the concern so as to provide equal value to both the buyer and the merchant after purchase.

While I may not clearly tell the technical way forward, but I can vividly tell of the ripe market for Crypto powered Merchandize in Nigeria and Africa at large.

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