Nigeria has launched Africa’s first digital currency called the eNaira. This will be the country’s new digital version of its currency.
The country’s President Muhammadu Buhari said on Monday that Nigeria has “become the first country in Africa and one of the first in the world to have introduced a digital currency for our citizens.”
Nigeria’s government said the new digital currency should improve cross-border trade and enable financial inclusion for those in the informal economy as well as increase remittances from abroad.
The eNaira was to have been launched on October 1 to coincide with the country’s independence day celebration but was delayed by the Central Bank.
Nigeria is Africa’s largest economy in terms of GDP and should soon be followed by neighbors Ghana, which has announced plans to also launch its digital currency soon.
China was the first major economy to launch digital currency with at least five other countries doing same since then.
Nigeria’s central bank is however making way for the launch of the Nigeria digital currency months after barring banks and financial institutions from facilitating transactions in cryptocurrencies.
In February this year the bank said in a statement that all financial institutions were prohibited from facilitating crypto currency payments.
“Further to earlier regulatory directives on the subject, the Bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency is prohibited,” the statement said at the time.
According to the Central Bank of Nigeria financial institutions are to identify persons and entities transacting in, or, operating crypto currency exchanges and go ahead to close such accounts immediately.
The bank said “breaches of this directive will attract severe regulatory sanctions.”
Nigeria is the second largest bitcoin market in the world after the United States.
Cryptocurrencies help many avoid constant depreciation of their currencies, making it easier for them to receive money from abroad.
Central banks around the world have also been working around creating digital versions of their currencies to compete with cryptocurrencies that are beyond the control of governments and global regulators.