Why Did CBDC Fail in Nigeria? Valuable Lessons for Developing Countries

In the rapidly digitizing era, many nations are eyeing Central Bank Digital Currency (CBDC) as the future solution for payment systems. However, Nigeria’s case illustrates that transitioning to CBDC isn’t a straightforward path, especially for developing countries.

Based on an analysis by Nicholas Anthony on Coindesk, the Nigerian government attempted to propel a transition to a cashless economy by implementing a Central Bank Digital Currency (CBDC). Yet, the imposed cash usage restrictions led to public protests demanding the restoration of paper money. Despite the government’s efforts to boost CBDC adoption, such as removing access restrictions and offering payment discounts, these initiatives proved fruitless.

Moreover, with cash withdrawal limits and currency redesigns, the situation worsened, triggering a cash shortage and escalating public dissatisfaction. Consequently, CBDC adoption in Nigeria remains abysmally low, with less than 0.5% of the population using it, while over 50% have embraced cryptocurrency. What can we learn from Nigeria’s CBDC failure?

The Importance of Public Acceptance

While CBDC technology might be advanced, without public trust and acceptance, its implementation is bound to face challenges. Nigeria’s attempt to limit cash usage to promote CBDC adoption backfired, leading to public protests and dissatisfaction. The lesson? New technologies should be introduced with an inclusive approach, understanding the community’s needs and habits.

An inclusive approach to CBDC implementation emphasizes community engagement, education, and understanding existing transaction habits. Before making CBDC-related decisions, public consultations and pilot tests in specific communities can offer insights into potential responses and challenges. Ensuring accessibility, security, and transparency in CBDC is also crucial for building trust and ensuring widespread acceptance.

Education and Digital Literacy

Before rolling out innovations like CBDC, public education is paramount. People need to comprehend the benefits, risks, and workings of CBDC to use it confidently.

Educating the public is a cornerstone of CBDC implementation. To ensure broad acceptance, people must grasp the basic concepts of CBDC, its advantages, and potential risks. Practical training on CBDC usage, from transactions to secure storage, is also vital. Addressing circulating myths and misconceptions by providing accurate and trustworthy information is essential. Collaborations between the government, private sector, and local communities can amplify educational efforts and foster public trust in CBDC.

Supporting Infrastructure

Without adequate infrastructure, such as widespread and stable internet access, CBDC implementation will face challenges. Developing countries must ensure that the necessary supporting infrastructure is in place before promoting CBDC use.

Fundamental infrastructure plays a pivotal role in CBDC implementation. Broad and stable internet access, along with the availability of digital devices like smartphones, are prerequisites. Additionally, a robust cybersecurity system is essential to protect user transactions and data. On the other hand, a user-friendly CBDC platform, digital identification systems, and reliable data centers and servers are the backbone of CBDC operations. To support public adoption, distribution networks, educational services, and regulations that protect user rights should be accessible and straightforward.

Tangible Benefits for the Public

CBDCs must offer something distinct and superior to existing payment solutions. If the public feels that CBDCs don’t provide additional benefits, they might be hesitant to adopt them.

CBDC, as a central bank’s digital currency innovation, offers high-level transaction security, payment process efficiency, and financial inclusivity for those underserved by banking services. Compared to other payment solutions, CBDC promises better transparency, value stability, lower transaction costs without intermediaries, and easy integration with government services and other financial tech innovations.

Flexibility and Responsiveness

When implementing new policies or technologies like CBDC, a flexible approach and responsiveness to public feedback are keys to success. Governments must understand that initial policies might not always align with public needs or expectations.

For instance, revisiting the Nigeria case discussed earlier, the Nigerian government initially tried to boost CBDC adoption by offering incentives like payment discounts. However, when this approach didn’t yield the desired results, they intensified efforts by restricting cash usage, which unfortunately sparked public protests and dissatisfaction. Here, the government’s sensitivity in adjusting their approach was crucial. In response, they might consider easing cash restrictions while enhancing CBDC benefits education and socialization.

Another case study is China’s “Digital Yuan” implementation. The Chinese government conducted a series of trials in various cities before a full launch. Through these trials, they gathered feedback from the public and businesses about desired features, functions, and encountered obstacles. Based on this feedback, the Chinese government adjusted the Digital Yuan’s features and mechanisms.

From both examples, it’s evident that a flexible approach and the ability to adapt based on public feedback are essential in implementing new policies or technologies.

Collaboration with Third Parties

Collaboration with banks, fintech companies, and other stakeholders is crucial to ensure a smooth CBDC implementation and its acceptance by the public. For instance, the “Digital Yuan” case in China serves as a prime example. The Chinese government, through its Central Bank (People’s Bank of China), partnered with major commercial banks and tech companies like Alibaba and Tencent in the development and testing of the Digital Yuan. Through this collaboration, the Digital Yuan was integrated with popular payment apps like Alipay and WeChat Pay, already familiar to the Chinese populace. This facilitated adoption as people didn’t need to download new apps or create new accounts to use the Digital Yuan.

Furthermore, in Europe, the European Central Bank (ECB) is considering the development of a “Digital Euro”. In its process, the ECB actively engages with various commercial banks, fintech companies, and other stakeholders to ensure that the future CBDC implementation will be compatible with existing payment infrastructures and meet public needs.


Nigeria’s CBDC failure offers invaluable lessons for other developing countries. CBDC implementation isn’t solely about technology but also how that technology is received and adopted by the public. With the right approach, adequate education, and supportive infrastructure, developing nations can sidestep the mistakes made by Nigeria and ensure a successful transition into the CBDC era.

Tuhu Nugraha
Tuhu Nugraha
Digital Business & Metaverse Expert Principal of Indonesia Applied Economy & Regulatory Network (IADERN)