Central Bank of Nigeria Partners with Gluwa to Boost eNaira with Credit Profiles

The Central Bank of Nigeria (CBN) and Gluwa Nigeria have signed an agreement to promote the use of the eNaira digital currency. Gluwa is a blockchain-based financial platform that has been operating in Nigeria for several years. As an agent partner of the CBN, Gluwa will integrate its Credal technology into the eNaira platform. This integration aims to create credit reputations for unbanked individuals, enhancing financial inclusion. The credit profiles will be accessible worldwide, making the CBDC more effective. The incorporation of Credal technology is expected to simplify loan origination, management, settlement, and credit assessment processes for local fintech lenders.

This collaboration is part of the CBN’s ongoing efforts to increase adoption of the eNaira. Launched in October 2021, the eNaira is the world’s second-oldest central bank digital currency. By mid-2023, less than 1% of Nigerians with bank accounts had eNaira wallets, and only 1.5% of wallet holders were active within a week. Credit ratings are a major challenge in Africa, with only 20% to 30% of Africans having a credit score. This leaves the majority of the population “invisible” to lenders. Other blockchain-based solutions have employed nonfungible tokens (NFTs) linked to individuals to establish credit histories, gathering data from small peer-to-peer transactions.

Gluwa and similar payment solutions in Africa heavily rely on the use of mobile phones instead of traditional financial infrastructure. Gluwa has been operating in Nigeria since at least 2022, collaborating with the Lagos regional government to tokenize agricultural assets. In April 2023, the company made a publicized proposal to advise the Nigerian government on cryptocurrency policy. The Nigerian government has frequently clashed with cryptocurrency exchanges, and as a result, Binance announced it would cease operations with the naira in March 2023 after being singled out by the government. Gluwa’s founder and CEO, Tae Oh, also leads the Creditcoin Network, which, like Gluwa, is a layer-1 blockchain. Creditcoin creates a public ledger of credit history and on-chain loan performance.