Nigeria’s CBN and Gluwa Unite to Overcome eNaira Adoption Challenges Post-Binance Controversy

The Central Bank of Nigeria (CBN) has forged an official partnership with Gluwa, a leading blockchain infrastructure firm, with the aim of accelerating the widespread adoption of Nigeria’s digital currency, eNaira, by harnessing the capabilities of blockchain technology.

This collaborative effort seeks to transform the nation’s digital financial landscape, especially in response to recent regulatory challenges faced by Binance, a major cryptocurrency platform operating in Nigeria.

The CBN’s collaboration with Gluwa was formalised through a Memorandum of Understanding (MoU), symbolising a dedicated effort to boost the adoption of eNaira. This development comes at a pivotal moment, occurring shortly after Binance halted support for the Nigerian naira due to ongoing regulatory hurdles.

Gluwa, now officially recognised as the Partner Agent of the CBN, is set to integrate its cutting-edge Credal blockchain technology directly with eNaira. This represents a significant stride toward fostering a more profound and collaborative relationship between the two entities.

The primary objective of this partnership is to leverage blockchain technology’s power to enhance financial inclusion, refine eNaira’s functionality, and stimulate financial innovation.

Gluwa’s ambitious goal is to onboard millions of Nigerians by implementing its Credal technology, providing a distinctive approach to building credit reputations for eNaira users. This strategic initiative aims to propel greater adoption of the Central Bank Digital Currency (CBDC) by establishing a decentralised credit profile, independent of traditional financial institutions and national borders.

In particular, the collaboration will streamline various financial processes, such as loan origination, tracking, settlement, and credit scoring for local fintech lenders. Through collaboration with lenders and fintech partners, Gluwa aims to facilitate direct eNaira transfers to customers, expedite the loan origination process, and establish eNaira as the definitive record for all loan transactions. This approach ensures accuracy and transparency in financial operations and credit scoring.

This partnership represents a significant advancement for Gluwa, elevating its status to an official technology partner of the CBN. The company views this as a major milestone in its mission to construct a borderless financial ecosystem with a specific focus on emerging markets, fostering greater financial inclusion.

Despite the eNaira’s launch in October 2021 as the world’s second Central Bank Digital Currency (CBDC), it has encountered challenges in achieving widespread adoption. The International Monetary Fund (IMF) reported “disappointingly low” public adoption, with only 1.5% of wallets engaging in transactions weekly. This collaborative effort aims to address these challenges and propel eNaira into a more prominent role in Nigeria’s digital financial landscape.

It’s noteworthy that this announcement aligns with a period of heightened regulatory scrutiny on cryptocurrency platforms in Nigeria, with Binance facing challenges from the government, including fines and the arrest of top executives. Gluwa’s partnership with the CBN emerges as a proactive initiative to fortify the country’s digital currency infrastructure amid evolving regulatory dynamics.

Gluwa, having sought a partnership with the federal government in April last year to establish a policy framework supporting the legalization and adoption of cryptocurrencies in Nigeria, brings a wealth of experience and success in the blockchain industry.

The company has pioneered several innovative blockchain-based financial products and services globally, including the development of the first blockchain-based credit repository through its Creditcoin network. This initiative empowers financial institutions worldwide to combat fraud and deliver instant credit scoring.