At last Friday’s IMF African Department Speakers Series, Kingsley Obiora, the Deputy Governor of the Central Bank of Nigeria (CBN) revealed USSD functionality as something of a next move to aid the penetration and usage of Nigeria’s national digital currency, eNaira, which has endured lukewarm reception since launch.
The new USSD funnel does seem like a genuine improvement on the product, though it also appears to be the latest effort in a so-far-futile attempt to promote a misfit and try to make it stick.
USSD, Obiora said, offered a viable path forward for the country’s Central Bank Digital Currency (CBDC).
“A lot of people might not have smartphones but that is essentially the next step of our improvement in the CBDC, to introduce the USSD code, so those that do not have smartphones can still transact,” Obiora said.
USSD transactions are quite popular in Nigeria, powering NGN 1.63 Tn (~USD 4 B) in payments in the last quarter of 2020. Although quite dated, it offers a reliable channel for distributing digital financial services, especially in a country where half the 200-million-strong population is estimated to be unbanked or underbanked.
But the fundamental propositions of the eNaira come up short when juxtaposed with other established forms of payment in Nigeria, where 40 percent of the population live below the poverty line for whom digital payment channels are fundamentally unsuitable.
The eNaira was essentially launched as a digital wallet known as eNaira Speed Wallet, downloadable from the Google and Apple app stores.