Lack of trust in the Nigerian government an obstacle to the success of CBDC – Fintech

While Nigerians appear to have embraced the Central Bank of Nigeria (CBN) digital currency, skeptical analysts believe a lack of trust in the government will ultimately limit e-naira's chances of success.

Threat from fintech startups

Additionally, some analysts insist that the digital currency's already weak position is exacerbated by the fact that it has to compete with fintech startups. As before reported from Bitcoin.com News Nigeria is home to some of the largest fintech startups and is a country that receives a relatively large share of the continent's fintech investments.

According to a Financial Times Test report, it is this threat from well-funded fintech startups that raises the opportunities for e-naira to meet some of the CBN's goals, such as bringing more people into the financial system or enabling more targeted social and welfare spending.

One of the analysts quoted in the report as expressing doubts about e-naira's prospects of success is Adedayo Ademuwagun, an analyst at Songhai Advisory. According to Ademuwagun, most of the goals the CBN wants to achieve with the digital version of the naira are already being addressed by private fintech startups. He explained:

The problem is that all of this can already be adequately addressed using the existing financial payment system. Nigeria is the fintech capital of Africa, so there are so many options, so many ways to pay someone, right now.

Trust issues

However, another analyst, Ronak Gadhia of EFG Hermes, believes that the belief that the government will monitor all e-Naira transactions could be enough to deter some from using e-Naira.

“The government effectively knows every transaction you make [with a digital currency] and in a place like Nigeria, where there is a bit of mistrust between ordinary Nigerians and the government, there can be skepticism about adoption,” Gadhia is quoted as saying in the report.

To support his argument, Gadhia points out how the Nigerian government was able to easily stifle the End Sars protests Freeze the bank accounts of people who organized the protests.

Despite his doubts about the e-naira's prospects, Gadhia insists that it is still too early to judge or reject the digital currency's potential.

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