What value does Nigeria’s e-Naira bring to the economy?

Despite being a huge economy, the Nigerian Naira is still considering an exotic currency, i.e. its tradeable pairs (both ways) are not easily accessible. For lack of a better word, the Naira-to-USD market is illiquid. If you wanted to trade your Nairas for US Dollars, the demand is huge, and thus the premium that goes with it, because of capital controls is equally huge.

Now, if the Naira became an eNaira, the question is who would be using this most in the world? Is the Naira in demand from users outside of Nigeria? The answer is clearly no. Nigeria is a net import economy, with a pretty large current account deficit. In plain English, it imports more than it exports, thus there is huge pressure on the Naira against the US Dollar, etc.

Whenever there is huge pressure on a local currency, like the Naira, it implies, that the general population has less confidence in the local currency, and would rather park their money in a more stable foreign currency, like the US Dollar (or British Pounds or Euros).

An eNaira would only facilitate fast local settlements on the national front and quick international trades where conversion into eNaira is required immediately (it used to be remittances but with the recent changes by the Central Bank of Nigeria) even that use case has diminished in its importance.

All-in-all, it will help the country very little at the start, but as more and more countries adopt an e-version of their fiat currencies, then cross-trade with more exotics would be immensely beneficial. This would be especially true to intra-Africa trade, where trading partners in neighboring countries would be able to provide liquidity to exotic pairs (think Tanzania Shillings and Nigeria Naira pairs), etc. Allowing trade to happen faster than today’s expensive correspondent banking networks that exist today.

So, all in all, it will become beneficial to Nigeria, except without other countries jumping on the bandwagon, the benefits may not be visible at the moment.

It will, for sure enable trading pairs and trade routes that were otherwise not possible.