Key Insights
- Nigeria partners blockchain startup Gluwa to drive adoption of its struggling eNaira CBDC
- Gluwa’s Credal tech to enable decentralized credit scoring tied to eNaira usage
- Aims to incentivize greater eNaira adoption by leveraging it for credit access
LAGOS (MarketsXplora) – The Central Bank of Nigeria (CBN) has partnered with blockchain credit startup Gluwa to help drive adoption of its struggling eNaira central bank digital currency (CBDC), the companies announced on Tuesday.
Under the collaboration, Gluwa’s decentralized credit profiling technology “Credal” will be integrated into the eNaira to create credit histories for holders independent of traditional financial institutions.
The move aims to incentivize greater usage of the eNaira by enabling it to function more like a conventional bank account for access to credit and loans.
“We aim to onboard millions by letting eNaira users build credit reputations as they transact, fostering adoption of the CBDC,” Gluwa said.
As a CBN partner agent, Gluwa will also work to establish the eNaira as the definitive record for lending by facilitating direct digital currency transfers between lenders and borrowers.
The announcement comes as Nigeria battles to revive interest in its CBDC launched in 2021 as the second such offering globally after the Bahamas.
But according to the IMF, the eNaira has struggled with “disappointingly low” adoption with just 1.5% of wallets conducting transactions weekly in its first year.
The CBN acknowledged those shortcomings last July, pledging to overhaul the eNaira model to boost activity and wallet sign-ups.
Crippling cash shortages have more recently highlighted the need to drive digital money adoption across Africa’s biggest economy to aid inclusion and remittance flows.
But naira volatility and chaotic policies like swap limits and a protracted dispute with cryptocurrency exchanges like Binance – culminating in $10 billion fines and executive detentions – have severely dented trust in Nigeria’s financial system.
Against that backdrop, the CBN hopes collaborating with Gluwa can provide a shot in the arm for eNaira adoption by integrating it with the blockchain firm’s innovative credit infrastructure built atop its Creditcoin blockchain.
The Credal technology lets users build decentralized credit profiles tied to their real-world identity and transaction history, without relying on traditional credit-scoring by banks or other centralized entities.
“This creates new incentives to transact on the eNaira over cash, as each transfer helps establish portable credit histories that can unlock future borrowing,” said Credal founder Mustapha Musah.
However, some analysts questioned whether the partnership could move the needle significantly on eNaira usage without broader reforms.
“Lack of utility and trust has hampered the eNaira so far. This is an interesting approach but Nigeria needs wholesale digital payments revamps and a more decentralized ecosystem rather than just fresh lipstick on the CBDC,” said FinTrust Capital’s Oghosa Agbontaen.
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