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.