President Muhammdu Buhari has launched the country’s Central Bank Digital Currency (CBDC) called e-Naira, with Nigeria becoming the first African country to digitise its currency, adding that with adoption of CBDC and its underlying technology, called block chain, can increase Nigeria’s GDP by $29billion over the next 10 years.
He said that the introduction of the eNaira would enable the government to send direct payments to citizens eligible for specific welfare programmes as well as foster cross border trade, noting that the move was in line with country’s commitment to drive financial inclusion and strengthened its cashless policy.
Buhari said that alongside digital innovations, CBDCs can foster economic growth through better economic activities, increase remittances, improve financial inclusion and make monetary policy more effective, adding that aside from the global trend to create digital currencies, there are Nigeria-specific benefits that cut across different sectors of, and concerns of the economy.
According to the president, the use of CBDCs can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country.
Buhari said that with the launch of eNaira, Nigeria has become the first country in Africa, and one of the first in the world to introduce a Digital Currency to her citizens. While assuring Nigerians of the safety and scalability of the CBDC system, the president said that the journey to create a digital currency for Nigeria began sometime in 2017.
”Work intensified over the past several months with several brainstorming exercises, deployment of technical partners and advisers, collaboration with the Ministries of Communication and Digital Economy and its sister agencies like the Nigerian Communications Commission (NCC), integration of banking software across the country and painstaking tests to ensure the robustness, safety and scalability of the CBDC System, ” he said while speaking at the official launch of e-Naira in Abuja on Monday.
The president also used the occasion of the unveiling of the eNaira to painstakingly explain to Nigerians why he approved the use of the digital currency. ”In recent times, the use of physical cash in conducting business and making payments has been on the decline. This trend has been exacerbated by the onset of the COVID-19 pandemic and the resurgence of a new Digital Economy.
”Alongside these developments, businesses, households, and other economic agents have sought for new means of making payments in the new circumstances. The absence of a swift and effective solution to these requirements, as well as fears that Central Banks’ actions sometimes lead to hyperinflation created the space for non-government entities to establish new forms of “private currencies” that seemed to have gained popularity and acceptance across the world, including here in Nigeria.
”In response to these developments, an overwhelming majority of Central Banks across the world have started to consider issuing digital currencies in order to cater for businesses and households seeking faster, safer, easier and cheaper means of payments. A handful of countries including China, Bahamas, and Cambodia have already issued their own CBDCs. A 2021 survey of Central Banks around the world by the Bank for International Settlements (BIS) found that almost 90 per cent are actively researching the potential for CBDCs, 60 percent were experimenting with the technology and 14 per cent were deploying pilot projects.
”Needless to add, close monitoring and close supervision will be necessary in the early stages of implementation to study the effect of eNaira on the economy as a whole. It is on the basis of this that the Central Bank of Nigeria (CBN) sought and received my approval to explore issuing Nigeria’s own Central Bank Digital Currency, named the eNaira,’’ he said.
Equally, the Nigerian leader noted that his approval was also underpinned by the fact that the CBN has been a leading innovator ‘‘in the form of money they produce, and in the payment services they deploy for efficient transactions.’’ He noted that Nigeria’s apex bank has invested heavily in creating a Payment System that is ranked in the top ten in the world and certainly the best in Africa.
”This payment system now provides high‐value and time‐critical payment services to financial institutions, and ultimately serves as the backbone for every electronic payment in Nigeria. They have also supported several private‐sector initiatives to improve the existing payments landscape, and in turn, have created some of the world’s leading payment service providers today,’’ he said.
On his part, the Central Bank of Nigeria(CBN) Governor, Godwin Emefiele, disclosed that the eNaira took off with over N500m of the currency minted so far, adding that no fewer than 33 banks have been fully integrated and currently on the platform and that over 2.5 million people would visit the website daily, while no fewer than N200 million has been issued to financial institutions.
According to him, over 2,000 customers have been onboarded and 120 merchants have successfully registered on the eNaira platform. he said, “customers who download the eNaira Speed Wallet App will be able to perform the following: onboard and create their wallet; fund their eNaira wallet from their bank account; transfer eNaira from their wallet to another wallet and make payment for purchases at registered merchant locations.”
He listed the functions of the app to include accessibility and onboarding of customers without BVN and the use of the eNaira on the phone without the internet to further drive financial inclusion, making Nigeria one of the first countries in the world to deploy the CBDC via USSD on phones without relying on internet connectivity.
Some of the additional functionalities include: “onboarding of revenue collection agencies to increase and simplify collections and the creation of sector- specific tokens to support the Federal Government’s social programmes and distribution of targeted welfare schemes in a bid to lift millions out of poverty by 2025”.
The CBN boss noted that the apex bank would continue to refine, fine-tune and upgrade the eNaira while assuring that “Nigerians should expect to see additional functionalities in the coming months.”
Emefiele also announced a new financial instrument titled “The 100 for 100 PPP – Policy on Production and Productivity,” to reduce the nation’s overdependence on imports, adding that the initiative would be anchored by CBN Development Finance Department under his direct supervision.
“Under this policy the CBN will advertise, screen, scrutinize and financially support 100 targeted private sector companies in 100 days, beginning from 01 November 2021, and rolling over every 100 days with a new set of 100 companies, whose names will be published in National Dailies for Nigerians to verify and confirm. The purpose of this instrument is to take further steps to reverse our over reliance on imports.”