1. Introduction
A cryptocurrency is just like a digital form of cash. It is an encrypted digital or virtual currency
meant to be a medium of exchange. It is a form of payment that can be exchanged
for goods and services. Many companies have issued their own currencies, often called tokens,
and these can be traded specifically for the goods or services that the company provides.
Cryptocurrencies work through the blockchain, which is a decentralised technology spread
across many computers, which manages and records transactions. According to Paxful – one
of the biggest crypto-exchanges in the world, Nigeria accounted for $400 million worth of
cryptocurrency transactions in 2020, ranking it third globally in trading volume.
A digital currency could be issued by the State or introduced by a Private Enterprise.
Digital Currencies like Bitcoin is issued by a private enterprise for online exchange of goods
and services. Much of the interest in these unregulated currencies is to trade for profit, with
speculators at times driving prices skyward. Many companies have issued their own currencies,
often called tokens, and these can be traded specifically for the good or service that the
company provides. To buy cryptocurrencies, one needs a wallet, an online app that can hold
currency. Generally, you create an account on an exchange, and then you can transfer fiat
money to buy cryptocurrencies such as Bitcoin or Ethereum.
Things are moving too fast. Some 18 years ago, when I was a Bank Teller in Onitsha,
Anambra State, third party money transfer was non-existent. Bank customers have to visit
the bank to effect banking transactions including checking of account balances. As a teller,
it was always a herculean task attending to hundreds of customers every day for services
such as verification of signatures, checking of account balances, checking of lodgements into
customers’ accounts, payment of cash etc. But with the revolution in the Nigeria payment
system and introduction of bank verification number (BVN), the foundation for online banking
was solidly laid.
To encourage e- banking and discourage cash handling, Central Bank of Nigeria initiated
many control measures including cash handling charges and we have started seeing the effect
everywhere with the deployment of point of sale (POS) machines. These monetary policy
efforts have reduced cost of handling cash as well as risk inherent in moving cash from one
place to the other.
2. What are the advantages and disadvantages of digital currency in a developing economy like Nigeria?
Before we respond to the above question, it is important to understand the operations of Mobile
Money being operated today in Nigeria. Mobile Money simple means online money stored in
mobile phone, applications, POS Machine etc from where banking transactions are executed.
Such online storage of money is backed up with the money a customer has in the bank account.
In other words, Mobile Phone/POS machine serves as new bank house to facilitate banking
transactions such as money transfers, checking of account balances, account history ,receiving
and payment of cash among others. We can see how effective the deployment of POS machines
has become even in our remote communities. The deployment of POS technology has created
about a million jobs in the last one year. It has made banking operations hitch-free, convenient
and cheap as a bank customer can effect payment to anybody at the comfort of his home. One
can conveniently make purchases online among other numerous online money transactions. It
has covered areas where commercial banks were finding most frustrating to operate because
of logistics issues thereby serving the interest of the ’unbanked’ population. POS technology
has taken off the street thousands of unemployed youths, empowering them and increasing
aggregate consumption, savings and investment. A POS operator beside my friend’s office
makes an average of N3000 profit on daily basis. Consider the multipliers effect such financial
activities will generate in the entire economy! Mobile Money operations in Nigeria have given
hope to millions of frustrated and depressed Nigerians that it is possible to build a prosperous
and viable future once the right political and economic decisions are taken and executed to
the letters.
Mobile Banking has performed creditably well in the Nigeria payment system. However,
even with the success recorded in the deployment of mobile money applications and point of
sale machines, Nigeria has a significantly large population without access to financial services.
In 2017, it was home to 3.4% of the world’s unbanked people despite contributing 2.6% to
the global population. Some progress has been made over the past decade to bring more
Nigerians under the formal financial system, according to a report by EFinA, but the figures
remain disturbing.
At the end of 2020, over 36% of the adult population (or 38 million adults) were unbanked
as the central bank missed out on its 80% national financial inclusion target. In addition,
just over 40 million out of an estimated 105.5 million Nigerian adults have bank verification
numbers (BVN), an important metric for gauging how many people have access to financial
As at today, about 45% of Nigeria adults have no bank accounts and this population have
no business with mobile money. This is a country where lawmakers proudly voted ’no’ for the
use of electronic devices to transmit election results for the simple reason that our telecommunication
infrastructures are still underdeveloped.
The legality of digital currency as a medium of exchange depends on monetary authorities.
The Central Bank of Nigeria few months ago announced the ban of digital currency (cryptocurrency)
because of fraudulent activities associated with it. But Prof. Kingsley Moghalu, a
former Deputy Governor of CBN dismissed CBN’s position insisting that no payment system
is devoid of fraudulent and criminal practices. Moghalu advised CBN to consider the possibility
of the issuance of its own digital currency as China, Sweden, Uruguay and other countries
are doing. Just few days ago, CBN accepted Prof. Kingsley Moghalu’s advice and announced
the commencement of digital Currency to be called e-naira come October 1st. According to
CBN, e-naira will make transactions cheaper with less conflict.
Godwin Emefiele, the CBN Governor confirmed that the economy is going digital and
cash cannot play in that space, adding that e-naira, which will represent the digital equivalent
of cash, will be used as fiat currency for transactions.
3. Is Nigeria ready for digital currency?
We can now try to address the economic implications of Mr Emefiele e-naira to ascertain the
viability of digital currency in the developing economy.
Is Nigeria ready for digital currency such as e-naira? Yes, Nigeria and Nigerians are ready
for digital currency! From the success story of mobile banking in Nigeria, digital currency will
induce more Nigerians to be part of rebuilding and rebranding processes. For instance, our
pension account is now digitally controlled by PENCOM but managed by pension managers.
Pension account is generated by PENCOM and every Nigerian worker is expected to have one unique pension account. The same as National identity card with biometric features to
identify and differentiate every Nigerian. With the deployment of these digital technologies,
Nigeria is ready for digital currency.
4. Would the introduction of digital currency mark the end of cash
operations in Nigeria?
Digital Naira is a monetary instrument that will exist alongside cash as just another monetary
option. The effective and efficient deployment of digital naira can mobilize Nigerians towards
a desired destination to achieve set economic and political goals. For instance, if the country
wants to encourage citizen participation in the electoral process, a digital currency app will
be created and funded with X- amount for anybody who registers for voters’ card between
2021 and 2023. The same could be done in the National identity card registration and this
will facilitate the creation of a reliable data bank for the country. Lack of reliable data is a
major challenge facing Nigeria as a country and digital currency could facilitate a stimulus
package that will address that concern. CBN can use digital naira to serve the interest of the
’unbanked’ population. Like pension accounts created by PENCOM and managed by Pension
Managers, digital naira account can be created by CBN and managed by Commercial Banks
and microfinance banks to achieve even and equitable distribution of income as well as induce
consumption and stimulate economic activities.
5. Conclusion
Depending on the CBN application of digital naira, it will always exist alongside the traditional
currency. However, the introduction of digital currency can only diminish or reduce the use
of cash just as mobile money has done but the overall benefit could be seen from the demand
and supply side of money market.


The Borgen Project: The Benefits of Cryptocurrency in Nigeria https://borgenproject.org/
Binance Academy: Learn all about Blockchain and Crypto https://academy.binance.com/en/
Timi-Koleolu and Aroh (2021): eNAIRA – The Future Of Digital Currency In Nigeria?
EFInA, (2020): New Data from EFInA Shows Growth in Financial Inclusion but Suggests
More Action Needed https://www.proshareng.com/news/Fintech/New-Data-from-EFInAShows-
Academia Letters, October 2021
Corresponding Author: Uju Ezenekwe, ur.ezenekwe@unizik.edu.ng
Citation: Ezenekwe, U., Anaenugwu, N., Ibeto, V. (2021). Cash Will Soon Be Obsolete. Will Nigeria Be
Ready? Academia Letters, Article 3694. https://doi.org/10.20935/AL3694.
©2021 by the authors — Open Access — Distributed under CC BY 4.0


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