…As CBN releases guidelines for eNaira
…Aggressive awareness required to achieve projection — Experts
By Ariemu ogaga, Abuja
President Muhammadu Buhari said on Monday that Nigeria’s new digital currency, eNaira, will increase the country’s Gross Domestic Product (GDP) by $29billion over the next 10 years. The President said this on Monday at the unveiling of eNaira at the State House.
According to the President, the launch of eNaira makes Nigeria the first country in Africa and one of the first few countries globally to introduce a digital currency.
The new payment system, which took the Central Bank of Nigeria (CBN) four years to roll out, is expected to drive financial inclusion, serve as a backbone for electronic payment in Nigeria and also enable the movement of more people from the informal to the formal sector, hence scaling up the tax base of the country.
Buhari also expects it to enable the government send direct payments to citizens eligible for specific welfare programmes as well as foster cross-border trade, a statement signed by presidential spokesperson Femi Adesina said.
“Let me note that aside from the global trend to create Digital Currencies, we believe that there are Nigeria-specific benefits that cut across different sectors of, and concerns of the economy,” the President noted.
“The use of CBDCs (Central Bank Digital Currencies) can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country.”
The President also commended the Governor of the Central Bank, Godwin Emefiele, his deputies and the entire team of staff who worked tirelessly to make the launch of Africa’s first digital currency a reality.
“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.
Following the launch of the eNaira by Buhari, the application for the digital currency introduced by the CBN has become available for download, with more than 5,000 downloads within hours of the launch.
This is as the apex bank released regulatory guidelines which stipulate that charges for transactions that originate from the eNaira platform will be free in the first 90 days commencing from Oct. 25.
After this period, applicable charges as outlined in the Guide to Charges by Banks, Other Financial and Non-bank Financial Institutions will become effective.
The eNaira speed wallet app meant for individuals had, as at 4p.m., seen more than 5,000 downloads while the eNaira speed merchant wallet had seen close to 1,000 downloads.
According to the regulatory and issuance guidelines, banks will automatically be onboarded by the CBN while merchants will be onboarded once they download the app and individuals will have to onboard by themselves.
The guideline revealed that there would be different wallets for different stakeholders.
“The eNaira stock wallet belongs solely to the CBN and it shall warehouse all minted eNaira,” the guideline stated.
It said that financial institutions were expected to maintain one treasury eNaira wallet to warehouse eNaira received from the CBN eNaira stock wallet.
“Financial Institutions (FI) may create eNaira sub-treasury wallets for branches tied to it and fund them from its single eNaira treasury wallet with the CBN and FI may create eNaira branch sub-wallets for its branches.
“The eNaira branch subwallet shall be funded from the treasury eNaira wallet.
“eNaira Merchant speed wallets shall be used solely for receiving and making eNaira payments for goods and services. eNaira speed wallets shall be available for end users to transact on the eNaira platform.”
To ensure security of funds, the eNaira is expected to have two-factor authentication and other measures.
Meanwhile, daily transaction limits for Tier 0, which is just phone number without verified National Identity Number, was set at N20,000 with a balance limit of N120,000.
Tier1 category, which has a verified number has a N50,000 transaction limit and N300,000 balance limit.
Tier2 and Tier3 categories have daily transaction limits of N200,000 and N1 million as well as a N500,000 and N5million balance limits while merchants have no limit.
A circular signed by CBN Director, Financial Policy and Regulation Department, Mr Chibuzo Efobi, revealed that the eNaira will compliment cash as a less costly, more efficient, generally acceptable safe and trusted means of payment and store of value.
“Additionally, it will improve monetary policy effectiveness, enhance government’s capacity to deploy targeted social interventions, provide alternative less costly channel for collection of government revenue and boost remittances through formal channels.
“The guidelines seek to provide simplicity in the operation of the eNaira, encourage general acceptability and use, promote low cost of transactions, drive financial inclusion while minimizing inherent risks of disintermediation or any negative impact on the financial system,” it reads in part.
Experts, namely the immediate past President of the Association of Telecommunications Companies of Nigeria (ATCON), Nigeria National Coordinator for the Alliance for Affordable Internet (A4AI.org), Olushola Teniola, and Economist, CEO of Centre for the Promotion of Private Enterprise (CPPE) said in separate interviews with Nigerian NewsDirect that Federal Government needs aggressive awareness for the acceptance of eNaira by majority of Nigerians.
Teniola said Federal Government should address lack of digital infrastructure that impacts more than 30million Nigerians and growing, which renders accessibility issues to eNaira.
“NIN-SIM policy conflicts with Category 0 eNaira accounts as potentially SIMs without NINs may be disconnected under the current SIM-NIN policy,” Olushola said.
According to him, “The CBN Governor referred to research carried out by the Bank of England where it is estimated growth to their economy in single digit contribution on the proposed launch of Bank of England’s CBDC planned for circa 2024-25. So it is simply a case that this was extrapolated for Nigeria’s contribution by 2031 or thereabout.
“The reality is that paperless and cashless drives by Nigeria appears to be a driving force behind this and the efficiencies that this can drive under an eGovernment initiative that advances financial inclusion and addresses government citizen interaction. This however, assumes a high mobile phone penetration especially smart phone adoption unless issues around USSD are rectified then cyber threats are a serious hurdle to the acceptability of the eNaira.
Meanwhile, on his part, Dr Muda said, “The eNaira is consistent with current digitalisaton trend across all sectors globally. Digital applications typically come with efficiency, cost effectiveness, smartness in usage and convenience.
“But it is still not clear what the value proposition of the eNaira is, beyond the psychological satisfaction of joining the league of countries with digital currencies. Perhaps it is still early days. It may be necessary to allow the scenario to fully unfold.
“However, the first major worry is the issue of security and vulnerability to cybercrime. The second is the pace of adoption having regards to the level of literacy and the huge informal economy.
“The truth is that as a country, we already have amazing accomplishments in the transformation in the payment system space. The use of electronic payments, the use of POS, mobile money transfers, use of debit and credit cards have gained tremendous traction and confidence.
“Transactions on these platforms are already in trillions of naira, and still counting.
“It remains to be seen what additional value the eNaira will bring. A great deal of sensitisation and awareness need to be undertaken to generate trust and confidence in this new payment system initiative,” said Yusuf.
Speaking on the development, President Stakeholder in Blockchain Technology Association of Nigeria (SiBAN), Senator Ihenyen outlined FG’s policies prior to eNaira launch that were counter productive to digital economy.
He explained that to embrace the full potentials of the Fourth Industrial Revolution (4thIR) regulators in Nigeria should learn to reimagine its policies to suit modern trends.
According to him, “When the Nigerian government — federal or state — shuts down nascent industries powered by digital echnologies because they are considered too disruptive, we are not ready for the digital economy.
“When the Nigerian government shuts down Twitter because social media is ‘getting too powerful,’ we are not ready for the digital economy. When the Central Bank of Nigeria (CBN) denies banking and financial services to a nascent digital assets industry that could become the goose that will lay the golden egg, we are not ready for the digital economy.
“When the National Information Technology Development Agency (NITDA) is championing blockchain technology adoption in the public and private sectors of the economy while most other key government agencies act in manners in conflict with the adoption strategy, we are not ready for digital economy.
“When the Securities and Exchange Commission (SEC) suspends its plans to regulate digital assets in Nigeria because CBN restricts cryptocurrencies in Nigeria’s banking and financial system without any law backing it, we are not ready for the digital economy. When the SEC licenses a digital platform today and CBN is freezing their accounts the next day, we are not ready for the digital economy.
“To be ready for the digital economy and blockchain technology, Nigeria must truly leverage digitalization and digital transformation to improve efficiency, transparency, and trust across industries and sectors in the economy. Second, regulators must learn to reimagine regulation in the 4th Industrial Revolution. They must realize and accept that it is not their call to stop innovators from innovating, but to prevent, penalize, or stop bad actors in the marketplace,” he said.