CBN Partners with Gluwa Nigeria to Boost Financial Inclusion and eNaira Usage
Summary:
The Nigerian Central Bank (CBN) and blockchain-based financial platform Gluwa Nigeria have partnered to increase the use of the eNaira central bank digital currency (CBDC). The agreement will integrate Gluwa's Credal technology into the eNaira system to establish 'credit reputations' for unbanked users, boosting financial inclusivity. Despite being the second-oldest CBDC worldwide, eNaira usage among Nigerians remains low. The partnership aims to expand credit ratings across Africa, where most lack access to such financial services.
The Nigerian Central Bank (CBN) has finalized an agreement with Gluwa Nigeria, a financial platform utilizing blockchain technology, to enhance the application of eNaira central bank digital currency (CBDC). As a blockchain-powered financial platform, Gluwa has been functional in Nigeria for several years. The deal will see Gluwa assume the role of CBN's agency partner, and it will incorporate its Credal technology into the eNaira system as outlined in a statement to Cointelegraph. The goal is to establish 'credit reputations' for users without bank accounts, thus improving financial inclusivity. Created credit profiles will be globally accessible and will amplify the effectiveness of CBDC: "Credal's integration is expected to optimize loan initiation, management, settlement and credit evaluation processes for local fintech lenders.". This move is a continuation of the CBN's numerous efforts to promote eNaira usage. Launched in October 2021, the eNaira is the second-oldest CBDC globally. Still, as of midway through 2023, less than 1% of Nigerians with a bank account held eNaira wallets, and less than 1.5% of wallet holders were active weekly. Credit ratings are a critical concern in Africa. Only 20% to 30% of Africans possess a credit score, leaving the rest 'invisible' to loan providers. Other blockchain-based solutions have been proposed to provide Africans with credit histories through soulbound nonfungible tokens (NFTs), capturing data from smaller peer-to-peer transactions. Most of the payment alternatives in Africa, including Gluwa, rely on mobile phones instead of conventional financial infrastructure. Gluwa joined forces with the Lagos regional government in 2022 to digitize agricultural assets. It made a public plea to the Nigerian government in April 2023, offering advice on cryptocurrency policy. The Nigerian government has had frequent disagreements with cryptocurrency exchanges. Following criticism from the Nigerian government targeting crypto exchanges, Binance will halt transactions involving the naira on March 8. Gluwa's founder and CEO Tae Oh also leads Creditcoin Network, a layer-1 blockchain like Gluwa, which produces a public record of credit history and loan performance on the blockchain.
Published At
3/7/2024 3:50:00 PM
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