In June 2021, the Central Bank of Nigeria (CBN) announced plans to launch a digital currency dubbed the ‘e-Naira’ by October 2021, joining 81 countries strongly considering digital currencies.
The CBN’s decision followed two years of contemplation on digital currency technology. Additionally, the CBN’s intention to achieve 80% financial inclusion by the end of 2021 is another motivation to launch digital money.
While there is much information about this digital currency which is soon to be launched, below are six things you should know about the nature of this innovation:
It is purely digital.
The e-Naira would be a Central Bank Digital Currency (CBDC) which means that while it is regulated by the CBN, it is a token that would only exist in digital and electronic form.
It is universally transferable.
The CBDC would be eligible for local and international transfers with little to no time lag and cheaper transaction fees than physical currencies. Also, it would allow you to transfer existing funds in your bank to your digital currency account.
It has a myriad of economic advantages
With the e-Naira, Nigerians can engage in easier cross-border trade, as well as enjoy a cheaper and faster inflow of remittances. Also, a digital currency would provide more financial opportunities for Nigerians as they would be able to create new business opportunities and financial products and services.
According to the CBN, another perk of the e-Naira is a reduction in the cost of operations and cash management. It would also leave a clearer footprint of digital transactions, making it easier for financial institutions to track transactions.
Financial Institutions would still be relevant
The digital currency would be implemented through a two-tiered model which would enable a structure that leaves room for public-private partnership. Just like the physical currency, the CBN will design the e-Naira but disseminate it through regulated financial institutions, which would then provide digital cash to individuals and businesses.
It’s not a Cryptocurrency
While all cryptocurrencies are digital currencies, it is important to note that not all digital currencies are cryptocurrencies. The e-Naira would be regulated by the Central Bank of Nigeria, but cryptocurrencies are not regulated by any government.
Implementation is on track
A recent development in the process of implementing digital currency is the selection of a technical fintech partner, Bitts Inc. After a thorough selection process, as prescribed by the Nigeria Public Procurement Act, Bitts Inc. emerged as a partner to the CBN for this innovative project.
Bitts Inc. prioritises the creation of payment systems that ensures an increase in social inclusion, financial inclusion and overall sustainable economic growth; the excellence in their operation methods has earned them acknowledgment from the Bretton Woods Institutions – IMF/World Bank. This is one of the reasons the CBN enlisted them for this crucial exercise.
Also, the company was the first fintech to digitize a national currency on a blockchain by creating a synthetic CBDC with the support of the Governor, Central Bank of Barbados and the country’s Minister of Finance.
As Nigeria counts down to her 61st Independence Day celebration, citizens can look forward to the start of a digital era where the CBN prioritises making financial operations more citizen-centric.
According to the Geo-economics Centre, the Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia, and Gernada are five countries that have fully launched digital currencies; if things go according to plan, Nigeria will be amongst them.