The implementation of CBDC (Central Bank Digital Currency) in Nigeria didn’t unfold according to the intended plan.
Once again, the elites targeted African nations as their experimental grounds. Nigeria embarked on a gradual introduction of its eNaira program, constructed upon the Hyperledger Fabric blockchain. Operating the nodes of this digital currency rested solely with the Central Bank of Nigeria (CBN). Initial stress tests indicated that this currency could handle approximately 2,000 transactions per interval. In October 2021, the government initiated incentive programs to encourage citizens to adopt the CBN system.
After a year had passed, Nigeria remained reluctant to embrace the transition, prompting the central bank to resort to more coercive tactics. In October 2022, the CBN took a drastic step by annulling and withdrawing the currency, with the explicit objective of reclaiming complete control over the circulation of currency within the country.
Under this new directive, the authorities declared that the existing paper notes would retain their status as legal tender only until January 31, 2023. Consequently, the populace found themselves with no choice but to convert their cash into the new system. Nigerians were all too familiar with the practice of currency cancellation, as it had become a routine measure employed by the government.
The Central Bank of Nigeria (CBN) made its intentions clear by openly stating that its ultimate objective was to establish a completely cashless society, wherein the eNaira would replace physical currency. However, the adoption rate of the eNaira remained abysmally low, with less than 0.5% of the Nigerian population embracing the digital currency. This sparked widespread protests throughout the nation, as people expressed their dissatisfaction and opposition to the proposed transition.
On December 2, 2022, the Central Bank of Nigeria took a significant step by issuing a letter to all banking institutions, imposing a stringent prohibition on the use of physical cash. This directive effectively banned the circulation and acceptance of paper currency within the country’s banking system.
As part of their measures, the central bank established specific cash withdrawal limits for individuals and businesses. Individuals were allowed to withdraw a maximum of ₦100,000 ($225) per week, while businesses had a limit of ₦500,000 ($1,123) per week. Individuals or businesses seeking to withdraw more significant amounts were required to pay a processing fee ranging from 5% to 10%. Additionally, ATMs were restricted to dispensing a maximum of ₦20,000 ($45) per day, and only ₦200 ($0.45) notes or lower denominations were made available in these machines.
According to a Bloomberg report, a significant majority, approximately 90% of the country’s population, relied on cash for their daily transactions. However, despite their reluctance to adopt CBDC, the people were left with no viable alternative. The demonetization process resulted in a substantial reduction of available cash, decreasing it from 3.2 trillion nairas to 1 trillion nairas. In response, the central bank introduced over 10 billion eNairas into circulation. These measures have sparked ongoing protests as the society, which heavily relied on cash-based interactions, has been disrupted and destabilized.
This scenario indeed serves as a starting point for discussions on the potential implications and concerns surrounding the implementation of similar programs in other countries, including the Western world. While currency cancellation may be unfamiliar to Americans, it is worth noting that the Federal Reserve has expressed an interest in exploring such options. They often present it as a convenient solution for the public. However, critics argue that these initiatives could potentially exert greater control over money, ensuring that all transactions remain traceable and subject to taxation.
Furthermore, as these programs expand, there are concerns that certain individuals and organizations could be excluded from participating in society altogether. These perspectives highlight the broader debates and implications associated with the evolution of digital currencies and their potential impact on privacy, financial autonomy, and societal inclusion.