Nigeria’s Central Bank Digital Currency(CBDC), the eNaira, was launched by president Muhammadu Buhari on October 23, 2021, making the country one of the first few in the world to have deployed CBDCs. So far, the enaira is beginning to gain traction, although not at the level that many had envisaged.
The eNaira is a type of CBDC which over 80 per cent of central banks across the world are currently exploring. CBDCs are new variants of central bank money that are different from physical cash and reserves and settlement accounts.
It is a digital representation of sovereign currency that’s issued by a jurisdiction’s monetary authority and a direct liability of the central bank that issued it.
Contrary to some beliefs, CBDCs are not meant to replace cash and bank deposits but to coexist as additional form of Central Bank issued Money.
To mark the one-year anniversary of the enaira which had become a point of reference for many African and western countries willing to adopt CBDCs as well as international bodies such as the World Bank and the International Monetary Fund, the CBN said, it will be reviewing the implementation journey of the enaira.
Earlier this year, the CBN governor, Godwin Emefiele had noted that, “since the launch of this great initiative, the e-Naira has reached 840,000 downloads, with about 270,000 active wallets comprising over 252,000 consumer wallets and 17,000 merchant wallets. In addition, volume and value of transactions on the platform have been remarkable, reaching above 200,000 and N4 billion, respectively.”
Emefiele had noted that the Nigerian payment ecosystem has witnessed tremendous improvement over the years. To consolidate its efforts towards engendering a digital economy, the bank deployed the eNaira, Africa’s first Central Bank Digital Currency (CBDC) in preparation for the payment landscape of the future, given the potential benefits that will accrue to a digital economy.
“The enaira provides Nigerians with a cheap, generally accepted, safe and trusted means of payment and seeks to enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payments ecosystem, improve availability and usability of central bank money, facilitate diaspora remittances, reduce the cost of processing cash, and reduce cost and improve efficiency of cross-border payment among others. Through the evolution of offline payments channels like agent networks, USSD, wearables, cards and near field communication technology, the enaira would give access to financial services to underserved and unbanked segments of the population.
“The eNaira platform also provides an innovative layer for products and services to be built with the aim of enhancing Nigerians’ participation in the digital economy and promote further development of a burgeoning Fintech ecosystem.
“Whilst celebrating the successes achieved following the launch of the enaira and the global recognition of the great job on-going by the CBN, it must be acknowledged that the journey ahead requires cutting-edge innovation and out of the box thinking to achieve the set-out objectives of economic diversification,” he pointed out.
Consequently, out of the box solutions, he said, would be the ones that drive financial inclusion, SME growth and the creation of start-ups; facilitate cross border trades and transfers as well as international remittances and foreign exchanges; ensure effective implementation of welfare-inclined government programmes and enhance efficiency in the interbank market.
However, the apex bank feels the CBDC would have gained more ground in the Nigerian ecosystem if it had the backing of commercial banks in the country. As the CBN governor had insinuated recently, commercial banks in the country have been uncooperative in spreading the use of the enaira amongst the populace.
Emefiele had stated that the use of the enaira for transactions has not kicked off as planned due to the “apathy” by bankers who try to discourage their customers form transferring their funds form their bank accounts to the enaira wallet.
While answering question on the progress made so far by the bank on the enaira project, Emefiele said, while there has been some progress, “we will admit that there is a need for a lot more enlightenment for enaira.”
The enaira was launched in October last year, making the country the second in the world to launch a CBDC. The enaira was designed to boost the cashless policy, reduce transaction cost as well as bring more people into the financial system.
Whilst urging Nigerians to not only download the app but also transfer funds from their bank accounts into their wallets for ease of transaction, Emefiele said: “there may be a little bit resistance to you from the banks
“This is because moving that money from your account into your wallet is a disadvantage to the banks. I want to say so boldly and bluntly. It is a disadvantage to them. I will say very bluntly, because I am a banker myself, there is apathy by the banks because they know that they will lose some income if you insist on using your enaira wallet for transactions.”
He noted that using the enaira “is almost costless at least till today. So you should go and tell your bank that you want your account to be linked to your wallet. It will cost you little or nothing compared to those other products that you have that would cost you money in the bank.”
Meanwhile, Emefiele said the CBN in moving on to the next phase of the enaira is working with telecommunications company, MTN Nigeria to activate the use of USSD code for enaira transactions in the country.
“We have been focused up till now on the banked population. We are almost completing tests with MTN to provide a channel where the unbanked can onboard using the code *997#. We believe that once this is done, we are going to be targeting the unbanked population. And we are also going to be using agency banking arrangements available and other means to ensure that we drive our enaira product.”
He also noted that the CBN in conjunction with the Bankers Committee will be ramping up its enlightenment programmes to increase awareness on the enaira, saying the publicity “will continue to go on. We will send some of our people to go on to enlighten people about the benefits of enaira.”
Speaking during a sensitisation campaign on the eNaira at the Kairo market in Oshodi Lagos, the Lagos Branch Controller at CBN, Mr Bariboloka Koyor, said “the central bank stands tall in terms of organization, commitment, arrangement. If there is any issue arising, we assure you we will do our best to make sure that no innocent person suffer a single dime loss that is the assurance from the governor of the central bank and from the central bank itself.
“The e-naira is safe and the e-naira is fine and designed for you. We are open to good ideas, innovations, things that will make it to the best ad acceptable The e-naira is designed to suits you and I, and now there is enough room for every one of us to enjoy very reliable, efficient banking services, the process is very easy and it is simple for anyone to be able to benefit and enjoy.
“The e-naira is designed with the best Integrated Security Management procedure that will help to mitigate against fraud, so there won’t be any fraudulent transfers and no fraudulent alert and nobody can deceive you with e-naira transactions because it is fool proof, and we are working on it more and more.
“Also to note, it is 100 per cent local and 100 per cent global. It is made in Nigeria and for Nigerians. It can interface with any application and any banking system all over the world, both for individual transactions as well as for corporates transaction.”
