The Nigerian president, Muhammadu Buhari, suggested in a recent speech that the new e-naira central bank digital currency (CBDC) could lead to an increase in the value of his country’s GDP by $29 billion in ten years.
Africa’s First CBDC
President Buhari made bold remarks in his speech at Monday’s launch of the e-naira CBDC, stating: “Indeed, some estimates indicate that the adoption of CBDC and its underlying technology, called blockchain, can increase Nigeria’s GDP by US$29 billion over the next 10 years.” In addition to boosting Nigeria’s GDP, President Buhari suggested that such a digital currency might help move more people and businesses from the informal sector to the formal sector.
Although he acknowledges that many countries are still in the research and experimental stages, the Nigerian leader insists that the Central Bank of Nigeria (CBN) — which he says has been investigating CBDCs since 2017 — is well-positioned to launch the digital currency.
In his speech, published by Premium Times, Buhari gives his reasons for approving the CBN’s request to explore the possibility of issuing what is now Africa’s first CBDC. He explained:
This move was underpinned by the fact that the CBN has been a leading innovator in the form of money they produce, and in the payment services they deploy for efficient transactions. They have invested heavily in creating a payment system that is ranked in the top ten in the world and certainly the best in Africa.
E-Naira to Boost Monetary Policy Effectiveness
According to the president, it is on the basis of this payment system — as well as the central bank’s support of several private‐sector initiatives to improve the existing payments landscape — that CBN is qualified to issue the e-naira.
However, despite his high praise of Nigeria’s financial system, President Buhari said the pilot phase of the CBDC rollout will need to be closely monitored and supervised. Finally, when successfully tested, the e-naira is expected to help increase remittances, foster cross-border trade, improve financial inclusion, and make monetary policy more effective.
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