Nigeria's central bank partners with Gluwa to drive CBDC adoption following Binance spat

Quick Take

• The Central Bank of Nigeria has entered into a partnership with blockchain infrastructure firm Gluwa to promote adoption of the country’s digital currency, the eNaira. 
• The partnership announcement comes days after Binance dropped support for the Nigerian naira following ongoing challenges from the country’s regulators. 

The Central Bank of Nigeria is teaming up with blockchain credit infrastructure company Gluwa to promote the adoption of eNaira, its central bank digital currency (CBDC), the company announced today. 

Gluwa hopes to drive adoption by introducing its Credal technology to the eNaira, which powers loans on the real-world asset oriented Creditcoin blockchain developed by the company. Now, when users transact using the eNaira, they will also build a decentralized credit profile independent of any financial institution or national borders, according to the company.

"Gluwa sets its high ambitions of onboarding millions of Nigerians by implementing its Credal technology to build credit reputations for eNaira users as a valuable new way to drive the adoption of the CBDC," the company's press release reads. 

Gluwa also hopes to use its new position as a partner agent of Nigeria's central bank to foster adoption by working with lenders and fintech partners to facilitate direct eNaira transfers to customers and establish the eNaira as the definitive record for loans, the company added. 

eNaira's adoption struggles

Nigeria launched the eNaira in October 2021, the world's second such currency. However, the eNaira has struggled with adoption, even following devastating cash shortages and a recent spat over Binance's operations in the country. The IMF, in a report reflecting on the first year of the eNaira's launch, noted that the digital currency had 24/7 uptime but struggled with "disappointingly low" public adoption, with only 1.5% of wallets engaging in transactions weekly. 

The announcement comes nearly eight months after Nigeria's central bank declared it would amend the current eNaira model to "ensure an increase in the volume and activity of wallet holders." However, Nigeria has made more news in recent weeks for its public spat with Binance, fining the company $10 billion and reportedly detaining two executives after the government alleged Binance, which is not authorized to operate in the country, manipulated foreign exchange rates for the naira.