What 100 Million “Unbanked” Nigerians Can Teach Canadians about Central Bank Digital Currency

Despite credit cards, e-transfers and online banking having already made money go pretty much digital, the Bank of Canada is busily working on a much bigger transformation. Canada is one […]
Published on December 13, 2023

Despite credit cards, e-transfers and online banking having already made money go pretty much digital, the Bank of Canada is busily working on a much bigger transformation. Canada is one of about 100 countries that – in uncanny synchronicity – several years ago joined the race toward retail central bank digital currency (CBDC).

Touted as the digital equivalent of cash, CBDC risks eroding the established banking system and, among many other problems, is likely to be vulnerable to hackers’ attacks which, should a foreign government use this as a tactic in “hybrid” warfare, might prove capable of destabilizing a target country’s economy.

Considering such acute risks, it would be reasonable to expect that the explosion of worldwide interest in CBDC is justified by its special qualities that address obvious pressing needs of the citizenry. The purported consumer and other needs for CBDC, however, seem to be entirely fabricated, while the qualities that actually differentiate CBDC from the money we use now are hushed and obscured by virtue-signalling.

CBDC’s main advertised feature is equivalency to cash. It is everywhere marketed as a means to advance “financial inclusion” – a convenient way for the “unbanked” to access financial services – both a stand-in and replacement for cash, which it is claimed is about to disappear from use.

The Bank of Canada admits, however, that CBDC cannot actually replace cash or make an “unbanked” person “banked”. That’s because CBDC does nothing to address the two key reasons people still use cash: the need for privacy and independence from technology. CBDC does the opposite. First, CBDC has a built-in lack of privacy as it’s designed to always leave a digital trail. Second, it requires the use of an internet-connected device – meaning it is not only technology-dependent but interruptible.

While some research suggests only 2 percent of Canadians still rely heavily on cash, a Bank of Canada survey found that 46 percent of us would find the elimination of cash anywhere from inconvenient to disastrous. What might happen if governments forcibly removed cash from circulation? We don’t need to guess, for we have a large-scale case-study available.

In Nigeria, about half of adults had no bank account when in October 2021 the government introduced eNaira, the world’s first serious CBDC implementation. Making 100 million “unbanked” Nigerians happy was no doubt intended not only as a national but as a global endorsement for CBDC. Yet it did the opposite, eventually rocking the country to its core.

A piddly 0.8 percent of already “banked” Nigerians downloaded eNaira wallets in the first year after the launch, of whom most did not engage in any transactions. Not dissuaded by such overwhelming indifference, the government doubled-down with an all-out attack on cash, demonetizing banknotes and forcing Nigerians to exchange their cash holdings for eNaira. The nation’s 100 million poorest people were left with paper money they could not use to buy food or other necessities. This triggered violent riots as desperate hungry people took to the streets, demanding reinstatement of cash. The situation persisted for more than three months until cash was re-enabled. Today Nigeria’s government is trying to boost eNaira use through artificial cash shortages.

The International Monetary Fund’s (IMF) consultants heavily pushed the “financial inclusion” narrative in Nigeria, fully endorsing it as “a key policy objective that central banks, especially those in emerging and low-income countries, are considering for retail [CBDC].” Yet bizarrely, the same IMF document notes: “The impact of CBDC for improving financial inclusion is currently speculative, where further evidence and experience are needed to fully understand benefits and limitations.”

How can the main reason for a large financial overhaul that will be life-altering for hundreds of millions of people and carries many risks be…speculative? As if dodging this question, the Bank of Canada turns the conversation on its head: instead of looking for a justifiable use case that warrants “wide adoption, acceptance and use of CBDC”, it goes into talk of “overcoming the barriers”. The Bank seems to have made its commitment to building CBDC capacity before finding a genuine need. And that leaves us with the only sensible conclusion: that the advertised justifications are just an awkward façade, hiding the real and not-so-welcome reasons.

The two major features making CBDC different from traditional money are that CBDC is centrally traceable and programmable. This makes CBDC almost infinitely dangerous. It will be only one step from monitoring your every financial move to telling you how and when to spend your money. CBDC will enable “special purposes” like spending caps or blocks, transfer limits, consumption controls, penalty taxes, forced loans, nudge economics, geo fencing and more. These things are already happening in China and, according to Russian officials, may soon begin there as well.

Those utterly undemocratic purposes should outrage any Westerner, but they fit China’s social credit system like a glove. They could be further enhanced by other privacy-intrusive measures like digital ID, surveillance and elimination of cash or alternative monetary systems such as cryptocurrency.

Canadians have expressed no desire, understanding or even, for the most part, awareness of the publicly-funded CBDC development and the reasons behind it. As in Nigeria, the nation’s central bank does not listen but simply insists on and proceeds with this affair, claiming it’s to benefit Canadians but failing or not even trying to articulate how. 

The original, full-length version of this article was recently published in C2C Journal.


Gleb Lisikh is a researcher and IT management professional, and a father of three children. He lives in Vaughan, Ontario and grew up in various parts of the Soviet Union.


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