Nigeria bans ATM cash withdrawals over $225 a week to force use of CBDC

December 7, 2022 Coin Telegraph

Nigeria bans ATM cash withdrawals over 5 a week to force use of CBDC

The limits set by the Central Bank of Nigeria are part of a broader push to encourage digital financial transactions.

Nigeria has drastically reduced the amount of cash individuals and businesses can withdraw as it attempts to push its “cash-less Nigeria” policy and increase the use of the eNaira — Nigeria’s Central Bank Digital Currency (CBDC).

The Central Bank of Nigeria issued the directive to financial businesses in a Dec. 6 circular, noting that individuals and businesses would now be limited to withdrawing $45 (₦20,000) per day and $225 (₦100,000) per week from ATMs.

Individuals and businesses will also be limited to withdrawing $225 (₦100,000) and $1,125 (₦500,000) respectively at banks per week, with individuals hit with a 5% fee and businesses with a 10% fee for amounts above those limits.

The maximum cash withdrawal via point-of-sale terminals is also capped at $45 (₦20,000) per day. Announcing the changes the Director of Banking Supervision Haruna Mustafa noted:

“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”

The limits are cumulative limits for each withdrawal, so an individual withdrawing $45 from an ATM who then tries to withdraw cash from a bank on the same day would be hit with the 5% service fee.

The previous limits on daily cash withdrawals prior to the announcement were $338 (₦150,000) for individuals and $1,128 (₦500,000) for businesses.

Adoption rates for eNaira have been low since its launch on Oct. 25, 2021. As reported by Cointelegraph on Oct. 26 the Central Bank of Nigeria has struggled to convince its citizens to use the CBDC with less than 0.5% of the population reported having used the eNaira as of Oct. 25, a year on from its launch.

Nigeria established its “cash-less” policy in 2012, suggesting a shift away from physical cash would make its payment system more efficient, reduce the cost of banking services, and improve the effectiveness of its monetary policy.

On Oct. 26 the Governor of Nigeria’s central bank, Godwin Emefiele, noted 85% of all Naira in circulation was held outside of banks and as a result it would be reissuing new banknotes in an effort to drive the shift towards digital payments.

According to a CBDC tracker from the American think-tank, Atlantic Council, Nigeria is one of 11 countries to have fully deployed a CBDC, 15 other countries have launched pilot programs with India set to join the ranks later this month.

Nigerians’ passion for crypto is stopping short at the eNaira

October 26, 2022 Coin Telegraph

CBDC

With less than 0.5% adoption, the central bank of Nigeria is struggling to push its eNaira CBDC to its citizens.

Nigeria’s central bank digital currency (CBDC) is not getting the warm reception expected from its crypto-savvy population.

According to a Bloomberg report, less than 0.5% of Nigeria’s 217 million population are using the government-issued digital currency — the eNaira — a year after its launch.

This comes despite Nigeria being identified by Chainalysis as the top country in Africa for crypto adoption and ranking 11th globally, while a KuCoin report found that 35% of the Nigerian population aged 18 to 60 had owned or traded cryptocurrencies this year.

Bloomberg noted that Nigerians have been confused due to a lack of clarity from the state which cracked down on crypto last year.

In February 2021, the Central Bank of Nigeria banned banks from servicing crypto exchanges in an effort to sever fiat on and off ramps.

Educating people who are generally wary of the state and ruling elite has also become a challenge for the central bank, according to the report.

The #Nigerian eNaira is a central bank digital currency (CBDC) that launched 1 year ago, however only 0,5% of Nigerians are using it.

According to TripleA, more than 10% of the population own #Crypto.

Nigerians want Crypto, but they don't want Government backed Crypto. pic.twitter.com/WaM8nmHxRg
— Crypto Rand (@crypto_rand) October 25, 2022

Furthermore, the naira has been devalued around six times since 2015 and economists expect a further 20% loss in value next year, as the economy has been further compounded by galloping inflation, which could make the push for a CBDC a hard sell to many of the country's citizens.

According to the director at Lagos-based emerging and frontier markets investment bank Renaissance Capital, Adesoji Solanke, “the eNaira does not address any of these basic use cases, so no surprise at its low adoption rates so far.”

The disappointing figures are now prompting the Nigerian central bank to ramp up efforts to increase its adoption, including offering a 5% discount to drivers and passengers of motorized rickshaws that ply the city streets, according to the report.

In August, Nigerian Central Bank governor Godwin Emefiele announced the eNaira project entered its second phase in August with an adoption target of eight million users.

At the time, he added that the CBDC has had about 840,000 downloads, with about 270,000 active wallets. By August there had been around 200,000 transactions worth 4 billion nairas — approximately $9.5 million at the time.

According to the Atlantic Council’s CBDC tracker, Nigeria is one of eleven countries to have fully deployed a central bank digital currency, the other ten are in the Caribbean.

Think tank launches ‘technical sandbox’ exploring United States CBDCs

September 2, 2022 Coin Telegraph

Accenture

The Digital Dollar Project’s Technical Sandbox Program is set to begin in October, aiming to provide a clearer understanding of the ramifications of a United States CBDC.

A United States think tank has launched a “technical sandbox” aimed at advancing the exploration of a potential United States central bank digital currency (CBDC).

In a Wednesday Tweet from Digital Dollar Project (DDP), the organization said the new program would explore “technical and business implementation” questions revolving around a U.S. CBDC.

The organization noted that the initial participants of the sandbox include crypto-firm Ripple, financial technology company Digital Asset, software platform Knox Networks and banking solutions firm EMTECH.

The Technical Sandbox Program aims to give the federal government, policymakers and the private sector a clearer understanding of how a potential CBDC would be rolled-out.

This includes the potential implications to retail and wholesale and international use cases such as cross-border payments.

The U.S Federal Reserve has yet to decide whether or not it will implement a CBDC but has been exploring the potential risks and benefits that come with them.

On Jan. 20, it released a discussion paper examining the pros and cons of CBDCs but neglected to give any hints about its future plans.

The paper suggested that CBDCs could act as digital money free from credit and liquidity risks, improve cross-border payments, help preserve the dominance of the U.S dollar, promote financial inclusion and extend public access to safe central bank money.

Potential risks found included a changed U.S financial system, more severe bank runs for other forms of money, reducing the power of monetary policy, operational resilience and a difficult balance between transparency and safeguarding consumer privacy rights.

Meanwhile, China’s own CBDC, the digital yuan, is quickly being rolled out across the country, while the same is occurring in Nigeria with the eNaira. The Bahamas and countries of the Eastern Caribbean Currency Union have also launched CBDCs, while Russia is set to roll out its own in 2024.

The FedNow service, an instant payment service set to be launched in mid-2023, aims to begin “technical testing” in September, according to a Monday press release. FedNow is seen as a step toward an eventual CBDC.

Davis Wright Tremaine LLP partner Alexandra Steinberg Barrage, a former FDIC policy expert, tweeted her support for the program on Wednesday. Barrage suggested that regardless of what your views are on a U.S. CBDC, pilot programs and data are essential when evaluating new tech.

No matter your views on a US CBDC (retail , wholesale), it's important to evaluate tech approaches alongside varied and complex policy issues. W/out data, robust public/private-pship, & pilots w/consumers and intermediaries, we cannot sharpen our thinking. @Digital_Dollar_ https://t.co/xLy02IOz6b
— Alexandra Steinberg Barrage (@alexbarrage1) August 31, 2022

The Technical Sandbox Program is set to begin in October with cross-border payments being the initial focus for the early participants.

The program is set to be released in two separate phases, including an educational phase and a pilot phase.

During the educational phase, providers and participants will seek to understand the technology from both a functional and business perspective. While in the pilot phase, the focus will be on identifying and testing specific ways in which CBDCs can be utilized.

The Digital Dollar Project is a partnership between the not-for-profit organization Digital Dollar Foundation and IT consulting firm Accenture. DDP seeks to encourage research and discussion around a U.S. CBDC and released a white paper proposing a tokenized U.S. digital dollar in May 2020.

Nigeria upgrades CBDC as crypto restrictions cripple fintech industry

May 10, 2022 Coin Telegraph

africa crypto

Nigeria’s central bank has upgraded its eNaira to steer the country away from crypto even after a UN report stated that restrictions on digital currencies are stifling the nation's fintech sector.

The Central Bank of Nigeria (CBN) is moving ahead with plans to upgrade the country’s central bank digital currency (CBDC) to be used on a wider range of goods and services. It is also maintaining harsh crypto restrictions that cripple the country's fintech sector.

The CBN Branch Controller Bariboloka Koyor spoke at a campaign aiming to “sensitize” businesses to the eNaira at a market in the country's most populous city of Lagos on May 9 according to a report from Vanguard. Koyor stated:

“Starting from next week, there is going to be an upgrade on the eNaira speed wallet app that will allow you to do transactions such as paying for DSTV or electric bills or even paying for flight tickets.”

Koyor said the upgrade was launched to make onboarding easier, touting its wallet that had no charges and was faster than internet banking. He added that in the future, the eNaira will be the only way to receive financial assistance from the government, stressing the advantages of early adoption.

“This is a project that the CBN has rolled out to reach every Nigerian in terms of financial inclusion and in terms of efficiency, reliability, and safety of banking transactions so that we can do banking transactions very easily and safely and the people in Nigeria can enjoy the benefit of the eNaira.”

The value of the naira has fallen by over 209% in the past six years which has pushed Nigerians to adopt crypto in droves. An April report from the KuCoin crypto exchange highlighted that around 33.4 million Nigerians owned or traded cryptocurrencies in the last six months.

Restrictions on crypto trading in the country tightened after the launch of the eNaira in October 2021. The CBN banned banks from servicing crypto exchanges in February of the same year but real enforcement happened in November 2021 when the CBN ordered the accounts of two crypto traders to be frozen.

This crackdown led to commercial banks in the country tracking their customer's accounts looking for signs of cryptocurrency trading which could cause accounts for fintech businesses to be flagged.

The restrictions on trading were cause for concern in an April report jointly published by the Secretary Generals of the Organisation for Economic Co‑operation and Development (OECD) and the United Nations (UN).

The report focused on the urbanization of Africa and said young Africans working in the tech sector “creating apps or trading digital currencies” were at risk from arbitrary government policies. It singled out Nigeria as an example, stating:

“The restrictions on cryptocurrency transactions…in Nigeria have crippled foreign direct investment in the fintech industry and negatively impacted millions of young Nigerians who earn a living from the sector. Many have found a way, however, to lawfully bypass these restrictions and continue business, effectively denying Nigeria the taxes and transaction fees that would otherwise come into the system”

There are no signs of CBDC adoption slowing down, recent research found 80% of central banks were considering a CBDC. On May 10, Tanzanian officials said that their CBDC plans are accelerating.

The Bank of Tanzania Governor Florens Luoga said in a Bloomberg interview that the country sent officials to countries with CBDC experience, including Nigeria, to learn from them directly citing concerns of “cryptocurrency speculators”.

From eNaira to eHryvnia, a Caribbean fintech develops CBDC around the world

December 20, 2021 Coin Telegraph

Barbados

"We're also excited that when working with central banks, we can do it in a way that is through regulation and compliance," says Bitt CEO Brian Popelka.

Barbados, a paradise island in the West Indies, is known for its azure beaches, tidal waves, shipwrecks, homegrown grown Barbadian (Bajan) hospitality, and more recently, an influx of remote workers. Now, one can add cryptocurrency innovations to that list as well. Bitt, a Bajan fintech firm developing blockchain technology, has successfully created the eNaira central bank digital currency, or CBDC, for Nigeria and is on the path to creating an electronic Hryvnia for Ukraine.

In an exclusive interview with Cointelegraph, Brian Popelka, chief executive officer of Bitt, discussed the technology behind the eNaira and the roadmap for the firm going forward.

CT: Would you please describe the technology behind the eNaira digital currency that you created?

Brian Popelka: It's really a stablecoin minted by the Central Bank of Nigeria [CBN]. So it is, unlike any of the typical cryptocurrencies or even a stablecoin, this [...] Is a digital version of the fiat currency within Nigeria. So this is government money. It can be transacted by a user who has downloaded a wallet through the various app stores and at participating merchants. So the ecosystem that we've worked with the CBN, the Central Bank of Nigeria, to deploy our technology allows the central bank to have mint and all the rights around minting.

Then, they distribute the digital version of that coin to participating financial institutions. Afterwards, those financial institutions can transact with merchants and consumers using the eNaira. So a little bit different than Bitcoin (BTC) in that it is a fiat currency. And, and while we certainly utilize smart contract technology [...] We're built on a hyper ledger transaction network. So it's a closed-loop within the Nigerian government.

CT: And so why did the Nigerian government, out of all the fintech firms in the world, select you guys, a crypto firm that's based in Barbados, to embark on this project?

BP: Yeah, so certainly born in Barbados, we have an office out of the U.S., and we are very proud of our Caribbean roots. Because really, the idea for digital currency was hatched in a [...] Developing region where the ability to move funds around digitally can have a significant impact in the Caribbean. For example, 95% of all transactions are done physically through notes and coins, 95% of them. And so part of the mandate in the Caribbean similar to Nigeria was to [...] Sort of do fewer transactions, using notes and coins, which of course, helps to eliminate some costs related to the printing and management of notes and coins.

But the Central Bank of Nigeria has been on this project for a long, long time. You know, for several years, they have done a lot of work to educate themselves on the process. But the reality is that we've been six years in the business, we have a mature product already built, we didn't have to build it to suit Nigeria; we already have a product built. And we were already deployed in the Eastern Caribbean with the Eastern Caribbean central bank. We were one of several, and they cut it down to a dozen. And one of the key reasons that they landed on us was, of course, we'd already had it out; [We] had the deployment, and they had a very tight timeline for being able to deploy this. So we met about an eight-week timeline to be able to go live.

Could a global CBDC become a reality?

A Bank for International Settlements report suggests an effective system would “need to involve both public and private actors to ensure interoperability and coexistence with the broader payment system.” https://t.co/PTOyTR06LM
— Cointelegraph (@Cointelegraph) October 3, 2021

CT: Interesting. So what are some new features you guys plan to deploy?

BP: The Central Bank of Nigeria has a long laundry list of feature sets they're interested in providing. And we're just there to help facilitate as the service provider. I think what you'll see is a lot of stuff you would typically see in electronic transactions. So obviously, there's the point of sale. Also, wallets that will be made available for people who don't have bank accounts. Financial inclusion is a key issue that we would like to help solve. Remittances, interbank transfers, and cross-border payments are ultimately part of the roadmap. Micro-lending or peer-to-peer lending, those types of financial instruments could always be added to the network in the future.

CT: And are there any other cryptocurrency projects you guys are currently working on?

BP: We are working on one in Eastern Europe [the digital Hryvnia] that we're pretty excited about. It's a project that we're working with the Stellar Foundation on. We are also in a private pilot with, there's no public announcement, but we are working with the National Bank of Belize on a project, it's not a CBDC, but it's a stablecoin project. And just so yeah, there's plenty of work, and then, you know, the entire market is picking up steam. And so, we're seeing inquiries and RFPs coming from all corners of the world. So we're very excited about, you know, the opportunities that are revealing themselves right in front of us.

eNaira

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