WHAT NIGERIANS SHOULD EXPECT WITH LAUNCH OF E-NAIRA
The Central Bank of Nigeria (CBN) in the early months of the year, announced plans to launch a digital currency before the end of 2021. The bank further indicated that the ‘digital Naira’ to be issued would be held in various banks’ digital wallets. China, the world’s second-largest economy has followed the Bahamas to open the doors for others to follow and Nigeria aims to be at the cutting-edge, at least, for Africa.
As the launch of the digital Naira (e-Naira) draws near, Nigeria is now set to join countries like China that have officially launched their own national digital currencies. In a bid to avoid conflict of interest, the CBN has stated that after the launch of the e-Naira, banks and other licensed operators may provide their own wallets since it does not intend to compete against them.
According to Nairametrics report, the CBN sent a presentation to banks about the e-Naira project releasing more details and guidelines about the project to banks. The presentation stated that participants in the e-Naira programme are featured in five stages. These are: Monetary Authority Suite. The central bank will be handing the first product component that includes issue, distribute, redeem and destroy the currency. Store data on a cloud server, monitor and analyse currency transactions.
Financial Institution Suite: Licensed financial institution will be able to request currency or issue stable coins, manage digital currency across branches, identify and AML compliance capability. E-Government Suite: The government will be able to efficiently process digital payments sent to and received from citizens and businesses.
Merchants will provide low-cost payment and business management software, POS, remote payment solutions, online capabilities, transaction analysis and reconciliation. Retail Consumer Suite: Features user-centred designs for a great user experience. The architecture will be expandable to enable innovation, features advanced privacy and security.
The report went further to indicate that it will have a non-interest-bearing central bank’s digital currency (CBDC) status, a transaction limit for customers, and a value-based transaction limit. It also stated that the e-Naira is a legal tender for the entire country. Some benefits accompanied these developments, as the report stated that the digital currency infrastructure would not charge for user-to-merchant transactions and peer-to-peer wallet transactions. The report added that the proposed transaction cost for the e-Naira wallet was stated.
While the recent surge and plunge in cryptocurrencies took the world by storm, many sceptics still dismiss them as the fool’s gold, and lacking in most of the fundamental properties of a fiat currency (medium of exchange, store of value and a unit of account).
Rakiya Mohammed, CBN director, information technology department, however, stated that the innovation would benefit the fintech ecosystem by enhancing operational efficiency. It will also create opportunities for fintech start-ups in building services and products as well as financial inclusion that will contribute to economic growth, and the creation of a new system complimenting the traditional payment system.
The CBN will now need to create sufficient awareness of its digital currency project and its benefits given the perception of most Nigerians who have come to associate crypto-currency use to online scams.