Nigeria is joining a small but growing clique of countries that are experimenting with digital fiat. According to Rakiya Mohammed, who works in I.T at the country’s central bank, disclosed that plans to issue a digital Naira are underway.
He was quoted by a local news agency stating that the piloting of the digital currency could happen within 2021. His statement supports those made by the country’s Central Bank Governor a month ago.
The governor, Mr. Godwin Emefiele, stated that while the country had barred financial institutions in the country from crypto transactions, it expected digital currencies to remain active. The Central Bank had issued directives that barred banks from offering services to crypto exchanges. The argument was that they were enabling financial crimes. This has since been proven to be untrue.
Still, on Mohammed’s statement, he added that the digital currency would not replace the Naira banknotes. Instead, it will act as a complement to the physical currency. He added that one of the advantages of the digital Naira would be efficiency in forex transactions. He specifically noted that the digital currency would help ease the country’s restrictions on Forex.
The country has a raft of restrictions on forex. They were instituted to protect the Naira after a sharp decline in oil prices affected its forex reserves.
The restrictions pushed a lot of Nigerians to embrace cryptocurrencies. Most of the forex/crypto activity comes from the diaspora community sending money back to the country. With a digital Naira, this market could open up significantly. According to World Bank figures, Nigerians sent home $26.4 billion in 2019.