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The e-Naira Promise For Nigerian Economy

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eNaira Is Better Than Cryptocurrencies - CBN Tells Nigerians

Nigeria achieved a feat on Monday when President Muhammadu Buhari launched a brand of the Central Bank Digital Currency (CBDC) known as e-Naira. The digital currency had been billed to be unveiled on October 1 but was shifted to a later date so that the overwhelming interest in same does not overshadow other activities slated for the Independence Day celebration. Nigeria joins countries like China, Bahamas, Sweden, and Cambodia where digital currencies are already in operation.

The Central Bank of Nigeria (CBN) has stated that e-Naira, which was put together after many years of research, will advance the boundaries of the payments system in order to make financial transactions easier. It added that the launch of the digital currency is a major step forward in the evolution of money and vowed to ensure that the e-Naira, like the physical Naira, is accessible by everyone.

On his part, Buhari said the adoption of new CBN digital currency is estimated to increase Nigeria’s GDP by $29 billion over the next 10 years. This was as the apex bank stated that the eNaira provides a unique form of money denominated in Naira, adding that it serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments. Users get to download the ‘speed wallet’ or ‘merchant wallet’ which allows them to store value and conduct transactions with speed and ease.

Naija News understands that the innovation is simply the digital form of the Nigerian physical Naira currently in circulation which places an e-Naira at par with N1. This means that the e-Naira and the fiat Naira will not diverge in value. Many have wondered what a digital currency would do differently in the country when people are already conducting electronic transactions on the internet, banks, cash apps, and POS machines.

Indeed, though the Naira was fairly digital before (as you can transfer value from your phone or laptop once you are connected to the internet, and via USSD without internet. The e-Naira, with its peer-to-peer system, removes all complexities associated with the extant means of electronic payment. The POS, for instance, involves about four or five steps of which there can be a breakdown in any one of these steps, thereby leading to charges on the debit card for a failed transaction.

The e-Naira leverages the blockchain technology which propels cryptocurrencies, the CBDC is backed by the sovereign – Nigeria – and is tied to the Naira (fiat currency). It’s like Nigerians opening an account with the CBN which cannot default in its obligations. Nigerians are quite active in the crypto world dealings so much so that the country featured as the second-highest trading nation in cryptocurrency as of April 2021. Most members of the Nigerian public are quite conversant with the use of digital currencies. Hence, it was not a surprise that the CBDC was widely embraced by the populace.

Unfortunately, the CBN was not quite ready as the initiative had a faulty start. Barely 48 hours after its launch the e-Naira speed wallet disappeared from the Google Play Store. While the merchant wallet was not affected, the speed was slammed with a poor rating of 2.0 from 2, 150 reviews which came as a result of several complaints about glitches and inability to sign up. The central bank will later explain that a temporary system glitch unable to handle the huge amount of traffic on the download site led to the temporary removal of the e-Naira Speed Wallet. The e-Naira app has since recorded over 100,000 downloads on the Google Play store alone as of press time.

The disappearance of the app also happened at a time the CBN alerted Nigerians to criminal and illegal activities of fraudulent persons who created a fake Twitter handle and are wooing unsuspecting Nigerians with claims that the apex bank is disbursing the sum of 50 Billion e-Naira currency.

We shudder to imagine the number of Nigerians who would have been victims of this scam based on the widespread expectation that the e-Naira should have some sort of accruable value. This therefore highlights the need for the apex bank to incentivize the use of the e-Naira by ensuring that there is a form of interest accruable to the amount which users keep in their wallet.

The amount to be saved from not minting or circulating physical currencies can cater to this, supported by derivatives from direct diaspora remittances at the official exchange rate. Also, since this innovation is latching on the crypto-savvy demography, Naija News believes that making the e-Naira appreciable will go a long way in weaning Nigerians from the risky digital currencies, thereby easily and speedily facilitating the $29 billion GDP growth figure projected by the President.

Given that Acceptability is one of the time-tested qualities of currencies, the central bank authorities must do more advocacy to get the buy-in of members of the public to the digital currency. This campaign should get down to educating the Nigerian public on how the e-Naira brings solutions to their financial challenges.

There have been rife speculations of charges that come with e-Naira transactions. These fears must be urgently debunked or clarified by the CBN if the e-Naira will engender the anticipated financial inclusion. Nigerians, who are already complaining over undue deductions from the account, will stay away from any system that will cost them to perform financial transactions.

Naija News commends the CBN for responding appropriately to the modern world where digital technology is increasingly making electronic transactions the order of the day. We welcome the opportunity for better monetary policy management and greater oversight of money supply which CBDC presents.

The CBN should quicken the planned rollout of the USSD-enabled e-Naira to capture the unbanked. When this innovation is within their reach, petty traders in remote parts of the country would be able to make transactions at the exact cost without having to forfeit their balance over lack of change. We are aware that the paucity of lesser denominations of the Naira has also led traders to sell a product worth N5 for N10.

The e-Naira has also been described as the base upon which other edifices can be built. The internet-savvy Nigerians should therefore jump on this opportunity by tasking their ingenuity to create solutions tied to the CBDC. This way, they will be securing their financial freedom and taking many other citizens off the unemployment market.