Nigeria’s pilot scheme for CBDC set for October

The Central Bank of Nigeria has announced it will launch the nation’s long-awaited CBDC asset later this year.

Rakiya Mohammed, the bank’s IT director, disclosed the date during a webinar while explaining the CBN had been researching strategies to develop and adopt a CBDC since 2017.

The project – named ‘GIANT’ – will run on the open-source blockchain Hyperledger Fabric. The director also mentioned that a proof of concept may be introduced before the end of this year to assess the viability of the asset.

The CBN initiative was announced as countries worldwide have shown interest in adopting digital assets and introducing a CBDC asset to their economy. During the webinar, the CBN emphasised that Nigeria “could not be left behind” in the race for the research, development and usage of global CBDC assets.

African countries with officially recognised digital assets include South Africa’s digital Rand and Ghana’s e-cedi.

Financial regulators noted that the digital currency’s launch would be beneficial for macro-management of the economy, increased growth and greater cross-border trades with neighbouring countries.

Additionally, the CBN highlighted potential benefits for more financial inclusion, more effectiveness when deciding monetary policy, improved payment and remittance efficiency, better revenue tax collection and greater control over social policies.

In February, Nigeria banned the trading of cryptocurrencies due to fears over potential fraudulent investments, money laundering, terrorism financing, and other crimes. The CBN advised banks and other financial institutions in Nigeria to close customers’ accounts that were associated with the trading of cryptocurrencies.

Despite the ban and restrictions on trading, Nigeria is one of the world’s largest Bitcoin trading markets. According to a March survey on crypto, 32% of people in Nigeria use crypto, with the majority using peer-to-peer trading via exchanges and other platforms to facilitate their exchange of Bitcoin.

Inflation rates have also spiked in Nigeria to around 18%, which has devalued the Naira and turned a tech-savvy population towards Bitcoin.