Close this search box.

Home of the best experts

Crypto, News, World
By Gontran de Quillacq
On October 31, 2021

Nigeria banned cryptos, introduces CBDC

Nigeria had banned cryptocurrencies earlier this year (to little effect). It has now introduced its CBDC, the eNaira. Currency and government stability are the likely reasons. Other countries will follow.

nigeria-twitter-ban-protestNigeria has introduced its CBDC (Central Bank Digital Currency) called the eNaira. It had banned all crypto usage in the country earlier this year.


The economy and cryptocurrencies

  • With 211 million citizens and a GDP of $480 bn for 2021, Nigeria is Africa’s largest economy.
  • Economic development has been hindered by years of public corruption, military ruling and mismanagement.
  • 30% of its economy comes from farming. Oil represents 40% of the GDP and 80% of the governements income. Remittances represents the country’s second source of foreign exchange.
  • Organized crime is substantial, notably financial crime and money laundering.
  • The population is growing fast. It is diverse and divided. International observers consider that the lack of education is driving Nigeria into a failed state.
  • Nigerian-youthAlso, 62% of the Nigerian population is 24 or younger.
  • Unsurprisingly the country ranks 6th in the world for cryptocurrency adoption, but it is also one of the world’s least “banked” economies.
  • The digital platform Paxful is the leading system used in Nigeria, with 1.5 million users (and 7 million globally).
  • The new currency will become the second largest CBDC in the world, after the Chinese Remnibi.
  • It is expected to increase the economy by $29 bn (6%) over the next 10 years.
  • The eNaira is pegged to the national currency, which was twice devalued this year and suffered years of underperformance.

eNairaThe deployment had some glitches.

  • The new CBDC was deployed by Bitt, which also managed the East Caribbean digital currrency DCash.
  • The launch was delayed from October 1st (Nigeria’s independence day) for technical reasons.
  • The Android app failed on the day after after the launch and was removed from the Google App store after 100,000 downloads.
  • The Central Bank immediately indicated that it would not be liable for any loss.
  • Attorneys believe that the waiver has limited power, since the introduction was organized under teh name of the Central Bank, not by a commercial institution.

Nigeria forbade cryptocurrencies

  • In February, the Central Bank had banned all banks and commerce from accepting or facilitating cryptocurrencies operations. It considered cryptocurrencies as a threat to the financial system.
  • Among the reasons, we can probably see:
    • NGNUSDThe national currency has lost 30% of its value against the USD over the last 5 years. Remittances tended to be sent in crypto, to prevent the risk of a loss in savings. As more remittances were converted into cryptocurrencies, the purchase of the local currency decreased, which amplified its fall.
    • Nigeria is rocked by civil unrest. The government cracked down and notably prevented a feminist coalition of 13 women to raise funds. The coalition managed to raise $150,000 nevertheless thanks to cryptocurrencies. That financial power scared the political class.
    • Bitcoin-trading-volume-in-NigeriaThe cryptocurrency volumes kept on growing nevertheless. Trades went underground, aka harder to monitor and less safe. Platforms started to use peer-to-peer approaches or moved abroad. Others started to declare the cryptocurrencies as regular currencies to circumvent the regulations.
  • Criticism of the ban was heavy
    • With a labor force 27.1% unemployed, 28.6% under-employed and very underbanked, eliminating a mean of commerce didn’t go too well with the Nigerians.
    • The Central Bank was accused of collecting greater control.
    • This being said, preventing money laudering is probably one of the reasons why the country introduced its CBDC.


Unlike developed countries, emerging countries have more to benefit from a mode of payment which is available on a cell phone and doesn’t require a bank account.

dangerIn the case of Nigeria, inflation and protests probably were the key reasons for the crypto ban and the later introduction of a CBDC, but no country can afford or will relinquish the control over its currency.

I suspect more countries will follow Nigeria’s path.




References (Navesink International)

References (Public domain)

Leave a Reply

Your email address will not be published. Required fields are marked *

We would like to express our heartfelt thanks to you, our clients, for your continued and growing business with us.We're also excited to share some...
Investments & markets
The CFTC just fined Goldman for failure to properly disclose prices fairly to clients. And it's all about a technical issue related to the timing of...
Investments & markets
Silicon Valley Bank (SVB) defaulted on Friday. At $212 bn of assets, it is the largest failure since 2008, and probably one of the fastest -...
The financial industry is a legal and compliance minefield for its million+ members. Through the Financial Professionals Coalition, Stephen Kohn, Bill Singer, and a talented group of...
Investments & markets
Xi Jinping's new leadership team will maintain the current direction. And China's GDP will slow; the Chinese economy is unlikely to reach that of the US...
Regulation, enforcement & litigation
Johnson & Johnson has spent billions on cases about one of its most popular products - talcum powder. As its executives try a brazen new legal...