The Central Bank of Nigeria (CBN) has said the ability of the digital currency E-naira to enhance tax efficiency as well as improve cross-border trade amidst the implementation of African continental free trade area (AfCFTA) are other incentives aside increasing financial inclusion.
Director, monetary policy department, Dr Hassan Mahmud, speaking on ‘Trends in the Nigerian system: regulating the fintech digital playing field’ said, part of the motivation to launch the digital currency is its ability to aid cross-border trade and boost tax efficiency, amongst others.
According to him, “the CBN, in partnership with Bitt Inc., an international fintech firm, is set to launch its digital currency, e-naira and this would increase cross-border trade, accelerated financial inclusion, bring about cheaper and faster remittance inflows.
“It would help with easier targeted social interventions, improvements in monetary policy effectiveness, payment systems efficiency and efficiency in tax collection.”
The CBN digital currency, he said, will offer parity of value and will operate as a non-interest-bearing asset and that Nigeria’s digital currency will function under a tiered anti-money laundering and Know Your Customer (AML/KYC) structure with different transaction limits.
He stressed that the AML/KYC pyramid will reportedly encompass unbanked citizens to provide their national identity-linked phone numbers for verification and users in this category will be limited to a daily transaction limit of N50,000 (about $120).
He added that the fintech space in Nigeria was growing rapidly and that it is estimated that Nigeria’s fintech landscape consists of around 250 fintechs.
From 2014 to 2019, he said, Nigeria’s fintech scene raised more than $600 million in funding and their core functions have been to facilitate payments using wallets, processors, merchant service providers for maintenance of mobile, domestic and cross-border transactions.