Is Nigeria being used to experiment with the CBDC takeover plan?

After redesigning the country's currency which was thought to give a facelift to the fading and depreciating image of the Nigeria Naira, the central bank of Nigeria has come up with some directives regarding cash issuance and withdrawal.

The directives by the central bank of Nigeria, CBN, on Cash Issuance and Withdrawal were meant to enforce limits on cash withdrawals, also known as close limits, to stop the use of the Naira as a proxy for the dollar on the black market. But what does this mean for the Nigerian economy and Nigerians?

According to The Cable, the CBN in a circular, asked financial institutions to ensure strict adherence to the new cash withdrawal policies in the form of daily, weekly and monthly limits.

The circular further stated that there should be no withdrawal of more than $224 per week for individuals and $1,154 per week for commercial enterprises and organizations.

In the same directives, the central bank of Nigeria CBN stated that "Customers should be encouraged to use alternative channels…to conduct their banking transactions.” Those channels include mobile banking, internet banking, payment cards, and the country's digital currency eNaira.

With these directives of enforcing limits on cash withdrawal while at the same time promoting alternative mediums of transactions, the CBN has proposed to directly lead to an increase in the use of currency other than the paper Naira as a medium of exchange in Nigeria.

This may very well be the first step in the government's moves to enforce the use of the country CBDC eNaira as a store of value and means of payment in the economy.

Of course, this may sound like a nice idea, but when you think about what will be the place of cryptocurrency in a country where a CBDC is being enforced systematically, you may have to reevaluate what you think of the entire idea.

Nigeria is one of the highest Cryptocurrency users in the world, so enforcement of the use of eNaira may put a damper on the growth of cryptocurrency adoption in the region.

Although it's not yet very clear where the central bank of Nigeria CBN is heading with the new directives, There may likely be a revisit of the crypto ban in the country soon, to ensure full compliance and drive down the CBDC push in the region.

For now, it's not yet very clear what the CBN hopes to achieve with its new directives. Will the CBN of Nigeria eliminate the use of cash in the market, and more so eliminate cash transactions on the black market? Or will the focus be just on cashlessness, using alternative monetary means, especially eNaira? There's a question that needs an answer sooner rather than later.

Many experts believe that it's a shift from a cash society to a cashless society. It is inevitable, that we move to a cashless economy to curb money laundering and terrorism financing. However, the question is not really about what will happen to the world's largest economy. But what will be the place of cryptocurrency in a country where a CBDC is being enforced systematically, and while simultaneously pushing for the use of alternative currency as a store of value?

Bitcoin is a peer-to-peer digital currency that uses peer-to-peer technology to operate with no central authority or banks. That's where the cash war lies. The central banks want to have oversight over the financial status of cryptocurrency users in Nigeria. And the only way they can succeed in doing that is by enforcing the use of eNaira.

Nigeria cryptocurrency users need to prepare for the worst. The use of cryptocurrency may yet again be sanctioned in the country. It has happened before and will happen again. The true intentions of the central bank of Nigeria with the new directives will gradually unfold when they are eventually enforced.