Amidst the Central Bank of Nigeria’s ban on cryptocurrency this year, CBN announced its intention to launch a central bank digital currency called eNaira on October 1st, 2021 to strengthen the value of the Nigerian currency and to improve cross-border transactions. However, the launch was postponed due to lined-up events on independence day.
On Monday, the 25th of October, 2021, President Muhammadu Buhari launched the eNaira in a Statehouse at the Federal capital, Abuja where he openly announced: “We have become the first country in Africa and one of the first in the world to introduce a digital currency to our citizens”. According to President Buhari, the currency would foster economic growth through better economic activities, increase remittances, improve financial inclusion, and make monetary policy more effective. “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“ he said.
CBN governor, Godwin Emefiele also said the e-Naira was designed to complement and strengthen Nigeria’s payments and financial architecture. The CBN has released a design paper that lists the importance of the eNaira and gives a bit more information about the design, benefits, and how the currency will work. According to the design paper, the new digital currency intends to fix the lapses in the distribution of welfare incentives in the heat of the COVID-19 pandemic. The introduction of the eNaira is to provide a clear means for the government to send direct payments to citizens eligible for specific welfare programs.
With the eNaira, cross-border transactions should be easier. According to the document: “it gives Nigeria the ability to transact separately, thereby reducing the demand for correspondent banking services and SWIFT international financial messaging and payment systems for the clearing and settlement of the trade.”
The Central bank’s digital currency was developed by a fintech company Bitt. “We are elated to have developed, tested and deployed the eNaira monetary infrastructure in record time. Today’s launch is an exceptional achievement for both the CBN and Bitt teams. We look forward to continued partnership on this CBDC deployment journey and to provide additional features to expand eNaira’s value to all Nigerians,” CEO of Bitt, Brian Popelka said.
The eNaira can be accessed via two applications – eNaira speed wallet and eNaira merchant wallet. Both are now available on Google Play Store and Apple app stores. To sign up on the eNaira wallet, you need your First Name, Last Name, Date of Birth, State of Origin, and Email as captured on your BVN enrollment data.
Through the eNaira speed wallet, customers can move money from their bank account to their wallet with ease and also make in-store payments using the merchant wallet. Users would be able to dial a USSD shortcode to make transactions faster.
The eNaira has been designed to mimic the physical Naira, which means it will coexist with different forms of money already in use without any interest attached to it. As a new form of central bank money, the eNaira is expected to break ground in financial management since it enables households and businesses to access central bank money.
With the eNaira, it should be easier for business owners to get support allowance from the government since the CBN has their wallet information and can make direct deposits on behalf of the government. In terms of data and privacy protection, the eNaira system is built with deep considerations around privacy and data protection and is in compliance with the National Data Protection Regulations (NDPR).