According to a CBN official, the Central Bank of Nigeria (CBN) plans to release its central bank digital currency (CBDC) by the end of 2021.
The CBDC Project of the CBN aims to improve foreign remittance transfers.
Rakiya Mohammed, an IT specialist at the CBN, addressed the apex bank’s CBDC intentions following the Bankers’ Committee meeting in Abuja, according to the News Agency of Nigeria on Thursday (June 10, 2021). For the last two years, the CBN has been looking at the possibility of a digital naira, according to the executive.
One of the reasons for establishing a sovereign digital currency, according to Mohammed, is to enhance international remittances. After oil, remittances are Nigeria’s second-largest source of foreign currency. According to World Bank data, remittance flows totaled more than $26 billion in 2019.
The CBN expanded its cash reward incentive in May, giving remittance receivers five nairas for every dollar sent through any CBN-licensed foreign money transfer business (IMTO).
According to the CBN source, the apex ban would include industry stakeholders and examine technology possibilities and develop a proof of concept to perform CBDC pilot testing. Furthermore, the country’s fiat currency will be supplemented with the proposed digital money. In response to the CBN’s proposals, Mohammed stated:
“Before the end of the year, the Central Bank will be making a special announcement and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace.”
Meanwhile, the Central Bank of Nigeria (CBN) restricted commercial banks from providing services to crypto-related firms in February. Later in March, the Nigerian central bank clarified that the prohibition did not apply to peer-to-peer cryptocurrency trading.
More African central banks are joining the CBDC race.
Nigeria has joined a lengthy list of nations whose central banks are investigating and intending to introduce CBDCs. While the trend appears to be strongest in Asia, with China leading the global race, African central banks are increasingly gaining traction.
Ghana’s central bank announced earlier this month that it was one of the first apex banks in Africa to launch a CBDC. According to the Bank of Ghana governor, the digital cedi had already passed the preliminary stage and was on its way to being implemented.
The South African Reserve Bank (SARB) also stated that it was undertaking a study into the viability of establishing a CBDC, which will be completed in 2022.