In exercise of her core mandate and in a bid to ensure sound monetary policy, the Central Bank of Nigeria recently achieved a major feat when she finally launched the much-awaited Central Bank Digital Currency, the eNaira platform, thereby becoming the first African country to unveil a digital currency as a legal tender or means of exchange.
Will the eNaira bode well for the economy? Many are positive about this possibility. An elated President Muhammadu Buhari, while launching the eNaira platform, said the Central Bank Digital Currency would increase inbound diaspora remittances. Remittances to Nigeria amounted to over $17.2bn in 2020 according to the World Bank. The president further noted that new eNaira will foster cross border trades , improve financial inclusions and enable the government to make welfare payments more easily among many other benefits. This indeed is a giant leap and worthy of commendation.
Re-echoing similar sentiment with the President , the CBN said the eNaira marks a major step forward in the evolution of money. It expressed the bank’s commitment towards ensuring that the eNaira like the physical naira is accessible by everyone, hence the theme of the eNaira: ‘Same Naira More Possibilities.’
Ahead of the eNaira launch, many of the nation’s financial institutions had set machinery in motion to integrate the digital currency into its financial system.
According the CBN Governor, Godwin Emefiele, ’33 banks are fully integrated and are live on the platform. The sum of N500 million has been successfully minted by the Central Bank. 200 million has been minted to financial institutions. Over 2000 customers have been onboarded and over 120 merchants have successfully registered on the eNaira platform.
But, no sooner was the product launched than the App disappeared from the Google Play store, making the new product inaccessible to consumers. This raised series of questions among experts, industry operators and end users. Some of the nagging questions were whether the disappearance of the APP was the handwork of internet hackers, a consequence of poor technology or a minor internet glitch? The suddenness of the collapse of the digital infrastructure was no doubt embarrassing.
The CBN through her Director of Communications Mr. Osita Nwanisiobi had since explained that the technical failure was a minor internet glitch which will be rectified in no time. He spoke during the apex bank’s fair in Umuahia , the Abia Capital City. He said the issue of security , reliability and dependability of the eNaira platform is guaranteed because the technology uses cryptograhic encrypted two factors of authentication. And so, the issue of whether the platform is secured is taken.
As assuring as the statement from the CBN was, the unfortunate glitch which happened soon after the platform was launched nevertheless raised genuine concerns from a wide section of the population on the viability , reliability, safety and security of the technology deployed for the new digital platform.
Though the CBN had successful recovered and returned the eNaira APP back to the Google Play store within 24 hours of the glitch, the sudden disappearance nevertheless caused anxiety and dampened the enthusiasm of would-be consumers of the product.
This minor hitch however does not defeat the purpose of the new monetary policy which experts across the board noted will be of immense benefit to the country.
According to Bitts, a CBN partner, ‘the CBDC represents a first step toward realising a quantum leap in infrastructure transformation that enables global financial networks to interact in a faster, more modern and secure way’ If you are still wondering what the eNaira is all about, here are a few tips that could help clear your doubts on the benefits of the digital currency:
“The eNaira is a Central Bank Digital Currency (CBDC) issued by the Central Bank of Nigeria (CBN) as a legal tender. It is the digital form of the physical Naira and can be used the same way as cash.
“The CBDC or eNaira is a digital currency with a direct liability on the Central Bank of Nigeria while the money in your bank account is Naira held as deposit liabilities by the financial institutions. “eNaira is a fast, affordable , secure and reliable payment options designed to support the digital economy and aid financial inclusion in Nigeria.
“eNaira will among other benefits enhance Nigerian payment ecosystem , increase revenue and tax collection, aid targeted social intervention and improve diaspora remittances. Users can make contactless payment with eNaira by scanning a QR code.
“eNaira is not designed to replace cash but will circulate alongside cash as a more efficient , safe and cost saving payment option.
“Funding your eNaira wallet is easy. It can be done through your regular bank app from your bank account and via cash through an eNaira verification agent, over the counter and at designated bank branch or a Shared Agent Network Expansion Facilities (SANEF)’’
“It’s good to note that eNaira has no interest yield or component.
“It is nevertheless safe and easily accessible. It is secured with advanced crypto currency techniques against counterfeiting , cloning and other forms of breaches.
“The eNaira operates an open system that is accessible to all users based on tested and tried Know Your Customer (KYC) Structure.
“Data protection and privacy remains fundamental to the core design of the eNaira system and users will be able to determine how their data is used shared and processed.”
is no doubt that cryptocurrency has come to stay as an emerging economic tender. The eNaira is envisaged to help reduce the high cost of printing physical Naira which according to CBN’s internal reports amounts to N307Bn ($747M) between 2004-2019. It will reduce the so-called leakages from state budgets due to inbuilt traceability that uses blockchain technology. At the same time eNaira will give the authorities the oversight control of monetary transactions especially in the efforts to check financial crimes such money laundering and terrorism.
The eNaira is not without its own challenges. Like every new innovation, it may face initial distrust from consumers. The recent disappearance of the App soon after it was launched tend to lend credence to people’s fear. However, now that the CBN was able to overcome the initial challenge, it is hoped that the service will become more stable and people will embrace the product.
CBN will need to reduce the cost of charges on transaction in other not to discourage consumers. It is also hoped that the speed of transaction on the eNaira platform will be an additional motivation for users.
According to Nwanisiobi, the eNaira is the future, it will reshape the country’s financial landscape and push legacy banks to expand and adapt the services they offer.