1.1 Background to the Study

The quick development and growth in FinTech have played an important role in changing global payment systems and the use of digital financial products like mobile banking, internet banking, and CBDCs. The move of Nigeria towards electronic payment systems began in 2012 when the Central Bank of Nigeria introduced a cashless policy which aimed at shifting away from the traditional system of using money to transactions through electronic means. Following this change, the Central Bank of Nigeria introduced e-Naira in October 2021 which became the first CBDC in Africa (Oniore & Efayena, 2026).

Even though it is innovative in terms of technology, adoption of the e-Naira currency has been quite slow especially by those businesses that make up the Nigerian economy but happen to be small scale or operate informally. Literature shows that although knowledge about using digital payment options is increasing, adoption is still affected by factors like low trust, poor digital literacy and cash payments preferences.

In Uyo city which is the capital of Akwa Ibom state, there are many activities that involve MSMEs. MSMEs in Uyo largely use physical money in the form of transactions because they are easy to use, fast, and avoid any kind of bank fees. But because of the penetration of POS terminals, mobile banking, and the introduction of a cashless policy by the government, the way transactions are conducted has been changed (Ukpong et al., 2023).

The introduction of the e-Naira offers another element for this transformation. From its name, it can be noted that the e-Naira is the digital version of fiat money made by the CBN. Utilization of the digital form of the Naira can contribute to reducing costs, increase inclusivity in the financial system and make payments easy. However, there have been concerns regarding the effects of adoption of the e-Naira to businesses that are dependent upon physical cash transactions. This is based on findings in other studies where it was shown that even though the adoption of digital means makes transaction efficient, it makes it difficult (Ele et al., 2024). With these considerations in mind, it is critical to investigate the impact of the e-Naira adoption on the operations of cash-based businesses in Uyo City.

1.2 Statement of the Problem

The use of cash is still dominant when it comes to making payments in Nigeria, especially by small and informal businesses. Despite the emergence of electronic means of payment, some vendors and service providers in Uyo are still inclined to cash transactions for reasons of convenience and security. The e-Naira currency has not gained much popularity despite its intention to facilitate smooth transactions and financial inclusion. From empirical research, the following reasons have been cited as responsible for the lack of adoption of e-Naira in Nigeria, including; poor awareness, poor perceived usefulness, poor digital infrastructure, and poor trust. In addition to these, it is noted that small businesses may be affected by several obstacles, which include; transaction errors, poor connection, and additional costs in the use of electronic payment systems.

In the case of Uyo, it is noted that petty trading, food vending, transportation business, and other small businesses that depend on cash would suffer significantly from the adoption of digital currencies. It becomes necessary to examine the level of adoption of e-Naira, and its effects on small cash businesses in Uyo. This becomes the problem of this study.

1.3 Objectives of the Study

The main purpose of this research is the analysis of the use of e-Naira and its effect on cash based business in Uyo.

The specific purposes are:

1.       to assess the awareness level of the e-Naira among the cash based business owners in Uyo;

2.       to determine the adoption rate of the e-Naira in cash-based transactions;

3.       to analyze the effect of adoption of the e-Naira on the performance of the business;

4.       to identify the difficulties in adopting the e-Naira among small businesses.

1.4 Research Questions

The above research is informed by the following questions:

1. What is the awareness level regarding e-Naira among cash-based businessmen in Uyo?

2. How extensively is e-Naira adopted in business operations?

3. What are the effects of e-Naira adoption on business performance?

4. What are the factors that prevent the adoption of e-Naira in Uyo?

1.5 Significance of the Study

The study is important for a number of reasons. Firstly, the study adds knowledge to the current body of knowledge on adoption of digital currencies among developing countries, specifically in the case of Nigeria. Secondly, the study offers empirical findings for decision-makers including the Central Bank of Nigeria for purposes of assessing the performance of the e-Naira program.

As regards the business community, especially the MSMEs in Uyo, the study provides an overview of opportunities and obstacles associated with the adoption of digital currencies in the course of changing from traditional to digital modes of money transfer and payment.

1.6 Scope of the Study

The research work is confined to Uyo Local Government Area of Akwa Ibom State, Nigeria. It covers businesses whose transactions involve money, which may include retailers, food sellers, transportation companies, and small services. The research work aims to investigate how the adoption of e-Naira affects the operation of these businesses.

1.7 Conceptual Clarification

E-Naira: An electronic currency issued by the Central Bank of Nigeria and serves as a legal tender in electronic form.

Cash Based Businesses: Businesses where transactions are carried out using mostly cash.

Adoption: The level at which either an individual or a business adopts and uses a particular technology or system.

Cashless Policy: A framework adopted to minimize cash transactions and promote electronic transactions.

1.8 Theoretical Framework

The research is premised on the theory of diffusion of innovations, which highlights the process through which innovative practices and technology get into the social system. Adoption is determined by aspects like perceived usefulness, compatibility, complexity, trialability, and observability. In regards to e-Naira, the entrepreneurs will adopt the currency if they find it useful, compatible, complex, and reliable.