Most of the complaints received were mainly around the inability of prospective users to onboard and activate the E wallet due to a mismatch of BVN enrollment records.”
File: President Muhammadu Buhari with the Vice President Prof Yemi Osinbajo(SAN) and the CBN Governor Mr. Godwin Emefiele as President unveiled the eNaira at the State House Abuja.

By Emeka Anaeto, Business Editor

Africa’s first digital currency, eNaira, issued by the Central Bank of Nigeria (CBN), as part of its central bank digital currency (CBCD) programme, is projected to be running on about 10,000 downloads per day, dpd, in the second quarter of this year, Q2’22. This projection by a source in one of the commercial banks leading in the eNaira platform, follows the 7,300 dpd recorded in the first quarter of the year, Q1’22.

However, the source also indicated that though the downloads record is not doing badly given the relative novelty of the product, the operators are concerned with the low level of Person-to-Person, P2P, transaction, indicating that actual usage by individuals is not as active as the downloads.

But he disclosed that Person-to-Bank and Bank-to-Person have remained upbeat constituting about 90% eNaira transactions so far.

CBN has stated that the eNaira transactions recorded range from P2P; Person to Merchant, P2M; Bank to Person; Person to Bank and Bank to Merchants and Merchants to Bank.

Consumer wallet downloads have also been far predominant over merchant wallet, a situation analysts believe has to do with lack of awareness by businesses as well as restrictions regarding Bank Verification Numbers, BVN, and other Know Your Customer, KYC, requirements.

However, from North America to Australia, and all over Africa, e-wallets were downloaded, demonstrating global usage.

Furthermore, it showed that the app was also downloaded in South America, Europe, Asia, and in almost all the countries in Africa.

The eNaira is Nigeria’s CBDC and it is the digital equivalent of the physical naira. As the tagline simply encapsulates, the eNaira is the same naira with far more possibilities, according to the apex bank

CBN Governor, Godwin Emefiele, said in January that the present rollout of the eNaira was intended for banked Nigerians. He went on to say that the BVN is included as a need to prevent fraudsters from hacking into the system.

Emefiele further stated: “Since its launch about three months ago, Nigerians have continued to gradually adopt eNaira as a fast and reliable means of exchange.”

“The Person to Bank and Bank to Person constitute 90% of what we see in the market, and as you will observe, we spent the last three months observing and monitoring the system and addressing issues mostly around initial onboarding,” he added.

The governor of the apex bank stated that the eNaira’s current rollout was meant of the banked Nigerians. He added that the inclusion of the BVN as a requirement is to prevent fraudsters from hacking into the system.

He said “We feel that you must have a BVN and you must have an account to be able to access it, And we also find that this has created some kind of constraints on people about onboarding with BVN and the rest of them. But again, we believe that what we do by the use of the BVN is the best so as to avoid fraudsters from hacking into the system.

“Most of the complaints received were mainly around the inability of prospective users to onboard and activate the E wallet due to a mismatch of BVN enrollment records.”

Highlighting the benefits of the digital currency, CBN’s Director of Corporate Communications, Mr Osita Nwanisiobi, said, “The e-Naira is expected to deepen financial inclusion by bringing more people into the financial space, support a resilient payment ecosystem, reduce the cost of processing cash, enable direct and transparent welfare intervention to citizens, increase transparency in revenue and tax collections, facilitate diaspora remittances, reduce the cost of financial transactions and improve the efficiency of payments.”

Noting that there have been encouraging responses to the e-Naira, Osita, added, “Customers who download the eNaira Speed Wallet App will be able to 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.

“I, therefore, appeal to Nigerians to embrace the eNaira just like our physical Naira – our pride.”

The eNaira, according to the CBN, would allow Africa’s most populous nation to experience the full benefits of the global digital economy. 

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.

Pegged at a one-to-one exchange rate with the Naira, the CBDC would ultimately reduce the influence of informal, cash-based economy in Nigeria and significantly expand the country’s tax base. The result, according to the CBN, would be a brighter economic future for the nation – to the tune of an estimated $29billion rise in GDP over the next decade.

The rollout of the eNaira last October wasn’t just momentous for the Nigerian economy. While 87 nations are currently investigating how to implement their own CBDCs, only two others have actually been officially launched.

Designed to accommodate the needs of over 200 million citizens, however, the eNaira is by far the largest active CBDC project in the world. 

Analysts believe that in a national economy that has been hit especially hard by the pandemic, the new digital currency is designed to give the CBN new and valuable insights into how and when money is spent, as well as disburse financial aid more quickly to those in need.

As such, “the eNaira has largely been welcomed by Nigerians,” explains Professor Iwa Salami of the University of East London, especially given its potential to lower remittance transfer costs. 

However, some of the challenges to faster adoption are embedded in Nigeria’s structural economic and environmental problems. For instance, the eNaira is a mobile-first digital currency, living in wallets that can only function in places with reliable access to mobile data.

Furthermore, the eNaira faces tremendous headwinds from other, less transparent forms of digital money. Amid a general lack of confidence in the government’s economic policy, cryptocurrency has grown markedly in popularity throughout Nigeria as a hedge against the weak Naira and a straightforward way of transferring money in and out of the country. For consumers dabbling in Ethereum and Bitcoin, therefore, the eNaira is almost irrelevant, explains Professor Joshua Chukwuere of North-West University, South Africa. 

One of the ways the CBN intended on breaking these patterns was through boosting financial inclusion. According to a report in 2020, up to 36% of Nigerians remain unbanked while only a third have access to an ATM or a bank branch within a kilometre of their home. A digital currency, by contrast, would allow the CBN to go over the heads of commercial banks and bring millions of financially excluded citizens into the real economy. It would also help to streamline the process of getting remittances into the country.

The IMF perspective

While the International Monetary Fund, IMF, has pointed out the digital currency’s vulnerability to fraud, the head of its Nigeria desk, Jack Ree, considers the transaction limits and stringent KYC requirements sufficient protection against this threat. Ree also applauds the CBN’s cautious attitude toward rolling out the eNaira. 

“Nigeria is bold enough to volunteer itself for this social experiment,” he says – going a lot further than the 87 other central banks that have talked about implementing a CBDC, but have yet to take action.

Even so, ordinary Nigerians still need convincing that the eNaira is worth their time, with figures from earlier this year indicating that peer-to-peer transactions constituted only 10% of the total number made using the digital currency. That’s partly down to a problem with promoting the eNaira, says some experts, which has largely been left to the CBN. 

Central banks are not institutions that are used to dealing directly with the general public, instead, commercial banks will need to play a greater role in promoting the digital currency to their customers.

That should help in improving uptake of the eNaira among Nigeria’s small trading community, explains Chukwuere, which forms a considerable slice of the country’s economy. 

“How many people in Lagos today are aware of the eNaira?” he says. Knowledge of the eNaira and what it can do simply “is not there”.

For her part, Salami remains optimistic as to the eNaira’s future, especially if measures are taken quickly to improve its functionality in the coming months.

“There is a need for the CBN to think very quickly about mechanisms to improve accessibility to the eNaira, without necessarily watering down its KYC/AML requirements,” she says.

That also needs to be matched by a sustained effort at making the digital currency relevant to those who regularly receive remittances.

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