In a significant move to enhance the adoption of the eNaira central bank digital currency (CBDC), the Central Bank of Nigeria (CBN) has entered into a memorandum of understanding with Gluwa Nigeria, a well-established blockchain-based financial platform operating in the country.
As part of the agreement, Gluwa, acting as an agent partner for the CBN, will integrate its Credal technology into the eNaira platform. This integration aims to revolutionize financial inclusion by creating “credit reputations” for unbanked users, making credit profiles “accessible across borders.” This initiative is expected to simplify loan origination, management, settlement, and credit assessment processes for local fintech lenders, marking a crucial step in the broader push for financial inclusivity in Nigeria.
The eNaira, the world’s second-oldest CBDC launched in October 2021, has faced challenges in achieving widespread usage. As of mid-2023, less than 1% of Nigerians with bank accounts had eNaira wallets, with only 1.5% of wallet holders active weekly. The collaboration with Gluwa aims to address this issue by leveraging blockchain technology and mobile phone-based solutions, reflecting the broader trend in Africa’s reliance on alternative financial infrastructure.
The partnership with Gluwa also addresses the prevalent issue of low credit ratings in Africa, where only 20% to 30% of individuals possess a credit score. Gluwa’s Credal technology will provide a comprehensive credit history for users, bridging the gap for those currently deemed “invisible” to traditional lenders.
Gluwa, present in Nigeria since at least 2022, has been proactive in contributing to the country’s financial landscape. In the past, it collaborated with the Lagos regional government to tokenize agricultural assets and played a pivotal role in advising the Nigerian government on cryptocurrency policy in April 2023. This collaboration comes at a time when Binance faces challenges, announcing the cessation of operations with the naira on March 8 following government criticism of crypto exchanges in February.
Gluwa’s founder and CEO, Tae Oh, who also heads the Creditcoin Network, brings additional expertise to the partnership. Both Gluwa and Creditcoin operate on layer-1 blockchain technology, emphasizing transparency and efficiency in credit history and on-chain loan performance. The collaboration between the CBN and Gluwa represents a significant step forward in Nigeria’s journey toward embracing digital currencies and fostering financial inclusion for all.
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