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Nigeria’s planned e-naira will not be enough to deter cryptocurrency users, analysts say

By David Whitehouse
Posted on Friday, 3 September 2021 17:16

Bitcoin is among cryptocurrencies banned in Nigeria. REUTERS/Mike Segar

Nigeria’s plan to launch the 'e-naira' digital currency is unlikely to end the use of cryptocurrencies among investors seeking hedges against naira weakness and inflation, analysts say.

In February, the central bank told banks and financial institutions that “facilitating payments for cryptocurrency exchanges is prohibited”. The bank moved to introduce the e-naira, which will count as a cryptocurrency and will be pegged to the physical naira, after the country’s vice-president, Yemi Osinbajo argued that cryptocurrencies should be regulated, not banned.

Introducing a digital currency in the context of the ban is “counter-productive”, says Toritse David, an investment banking analyst at Standard Bank in Lagos. She sees expectations of further naira weakness as a motivation for cryptocurrency use.