The Nigerian government has redesigned the naira, the country’s currency, but the re-introduction of the new note has resulted in a shortfall and a currency crisis. Some cryptocurrency adherents say it is an opportunity for the citizens to embrace digital currencies for payment, but that doesn’t seem to be happening.
An unforeseen currency crisis
A currency crisis in Nigeria may stimulate the adoption of cryptocurrency among the populace, a report says. Bitcoin Archive said that the currency crisis in Nigeria could fuel the adoption of Bitcoin.
In Q4 of 2022, the Nigerian government announced plans to redesign the highest denominations of the country’s currency, the naira. These are N1000, N500, and N200. The currency redesign has not worked as well as people expected. At the moment, there is an acute shortage of the newly redesigned currency, resulting in a financial crisis in the country.
Conflicting signals from the authorities
A recent report monitored by Cryptoinfowatch said that the currency shortage may lead to greater adoption of cryptocurrency in the country. This is happening as the country’s apex court has ruled that the old currencies should be in use until the end of 2023, but the Central Bank of Nigeria has yet to obey the court’s order. An earlier order issued by the Supreme Court in favor of the use of the old currencies pending when the new notes gain traction was also disobeyed by the Central Bank of Nigeria (CBN).
In a reaction to the probability that the cash crunch would lead to crypto adoption, a Nigerian crypto adherent, Akeeb Dahian Akowe, said,
“Our government has introduced a cashless policy, and that’s what’s pushing cryptocurrency adoption.”
Anti-cryptocurrency policy of the Nigerian Central Bank
However, a sampling of opinions in the country shows that there is no concerted effort to sell the idea of cryptocurrency use to the populace. In fact, the Nigerian central bank has issued some anti-cryptocurrency policies in the past.
A February 5, 2021, letter issued by the regulator warned members of the public of the risks associated with investing in cryptocurrencies. It also warned banks operating in the country against facilitating crypto payments. The country’s central bank issued the digital form of the e-naira but it hasn’t received widespread adoption in the country. Its app was even yanked off Google Playstore due to poor reviews.
With the country’s central bank’s anti-crypto stance, there are no indications that Nigerians are about to go for cryptocurrencies in lieu of the naira. The opinion of another Nigerian crypto user, Adesoji Adeyemi, seems to confirm this. In response to the suggestion that crypto adoption is imminent in Nigeria, Adeyemi said,
“Pure lies; I wonder how you convince yourself to believe this. “The average working-class Nigerian doesn’t trust cashless transactions, and don’t even talk of cryptocurrency; it’s all scams, they will say.”
A top adopter of digital currencies before the crisis
However, another crypto enthusiast, BB Zak, pointed out that Nigeria was among the top adopters of Bitcoin and cryptocurrencies prior to the currency crisis. He added that the crisis has had little effect on the rate of adoption.
“Nigeria was already one of the top 5 countries adopting Bitcoin before the currency crisis. “The currency crisis didn’t fuel anything but only added to Nigerians suffering,” he said.
What seems to be obvious from all this is that crypto adoption, though increasing in the country, could have been higher if the country’s financial regulators were not so anti-crypto. With the restriction placed on crypto transactions by the CBN, Nigerians would have to make do with the naira for now.