Apathetic Nigerian lenders are frustrating the adoption of e-naira because they fear it will deprive them of a key revenue stream, said Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN). Emefiele said the central bank was working on a channel that would allow Nigerians without bank accounts to open e-naira wallets.
E-Naira undermines lenders’ investment in mobile banking infrastructure
Nigerian central bank governor Godwin Emefiele has reportedly criticized some lenders whom he accuses of thwarting the adoption of e-naira digital currency in the country. According to Emefiele, lenders are not prioritizing the promotion of central bank digital currency as they fear it will deprive them of income from normal banking services.
Explaining the reasons for lender reluctance, a Bloomberg report said e-naira transactions do not incur fees while deposits are not considered cash on the books of lenders. Furthermore, the e-naira digital currency would undermine the investments that lenders have made in mobile banking as part of their efforts to increase fee and commission income.
After describing the reluctance of lenders to promote the use of central bank digital currency (CBDC) as “apathy”, Emefiele revealed that the Central Bank of Nigeria is close to concluding tests on a channel enabling Nigerians without a bank account to open e-naira wallets. The central bank is working with mobile network operator MTN on this channel.
According to the CBN, since the launch of the digital currency in the fourth quarter of 2021, only 700,000 e-naira wallets have been downloaded. This is partly because only account holders can open an e-naira wallet.
Meanwhile, following the central bank’s two-day monetary policy committee meeting, the CBN would have decided to raise the monetary policy rate (MPR) to 14%. Regarding the rate hike, Emefiele reportedly said:
If inflation continues to rise at this rate, we will continue to tighten [the] rate, but we are considering other measures that will slow inflation and food prices. But if that doesn’t happen, we [MPC] cannot promise that rate hikes will stop.
The committee, however, resolved to “keep the asymmetric corridor at +100/-700 basis points around the MPR”. The liquidity ratio is also unchanged at 30%.
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