The The launch of eNaira on October 25 should be seen for what it is: a ringer to deepen the digital currency exchange by Central Bank of Nigeria Governor Godwin Emefiele. It was also fitting that President Muhammadu Buhari personally launched the central bank’s new digital currency (CBDC). This shows the seriousness and commitment of the Nigerian government to develop the country’s digital economy.
Despite having a late start in the digital mobile market and even in the deployment of broadband, two key elements of electronic financial transactions, Nigeria has overtaken many countries in recent years. Year after year, electronic transactions in financial markets have continued to collapse. A truly cashless Nigeria is changing. Under Emefiele as governor of the CBN, he experienced a significant rise. The real proof can be found in the varnished queues in the deposit sections of commercial banks. The buzz of overloaded banknote counting machines is a thing of the past. Why carry bulky naira banknotes when you can just transfer. Why accept payment in naira banknotes with all the associated risks when you can do the same via POS or wire transfer. And trust Nigerians, they have long embraced electronic transactions.
In the fourth quarter of 2020 (Q4 2020), the National Bureau of Statistics (NBS) estimated the total volume of electronic transactions at 3,464,811,083 with a value of 356.47 billion naira recorded on electronic payment channels. Topping the list are online transfers with a transaction volume of over 2.23 billion transactions valued at 120,270 billion naira. Money is no longer king. Even checks are quickly losing their appeal.
Welcome to the era of electronic transactions where billions of naira swap hands without notice. Nigerians are already familiar with electronic transactions. This makes the eNaira CBN both exciting and intriguing. Before eNaira, some Nigerians were immersed in the cryptocurrency frenzy. But cryptos have their drawbacks: surreal and not subject to regulation and therefore risky as a transaction instrument; subject to underhand manipulation by crooks; has been the target of terrorists and their financiers to move money across borders and shop for their deadly tools of destruction. The list is long. Not so, this eNaira. It is just another form of the physical naira but in digital form. It is not in competition with the paper naira. They are both at par, so no fear of arbitrage.
Moreover, eNaira is transparent with the paper naira. And interbank transfers are easy. It is about “what you see is what you get”. Months before the launch, CBN held multi-stakeholder consultations to announce the arrival of eNaira, whose history dates back to 2017. The global digital space is growing. The World Bank and the International Monetary Fund (IMF) have both predicted quantum growth in the digital economy space over the coming decades. As cryptocurrency rides the crest of the digital economy market with fierce daring, even with its high risk, reserve banks around the world have been researching the appropriate steps to take to gain as much of a foothold in the market as possible. evolving digital economy. Nigeria’s central bank has started researching the best possible concept of digital currency to adopt. The result of this journey that began in 2017 is what is now called eNaira.
Emefiele said the aim of the research was to build a compelling case for the adoption of a digital currency in Nigeria to enable a more prosperous and inclusive economy for all Nigerians.
President Buhari who holds the historic record of being the first African leader to launch central bank digital currency projects which, over the next decade, the CBDC has the capacity to inject as much as $ 29 billion into the country’s GDP. This is possible, especially with Nigeria accelerating its broadband penetration and deployment. Nigeria currently has an ambitious broadband plan (2020-2030) that aims to equip the entire country with broadband infrastructure, targeting 90% of the population and 70% of the landmass. Add to that the increasing mobile density. As of September 2021, there were 190,520,914 active GSM lines with over 229 million lines connected. And if you consider that most digital transactions in the financial space are done through handheld devices, then you can imagine what awaits the digital currency market: a bright future! Yet eNaira’s benefits go beyond its contribution to GDP.
CBN allocates benefits for Nigeria and Nigerians to include: Supporting a resilient payments system ecosystem; encourage rapid financial inclusion; reduce the cost of handling cash; allow direct and transparent social intervention for citizens; increase revenue and tax collection; facilitate diaspora remittances; reduce the cost of financial transactions and improve the efficiency of payments. This list is not exhaustive.
Thanks to CBN for whetting the appetites of Nigerians before launching eNaira. The pre-launch public awareness, consultation with focus groups, including the media, helped to stimulate public interest and the result is evident. Just hours after the eNaira platform went live, there has been tremendous interest and response from Nigerians, both at home and in the Diaspora. A good 2.5 million daily visits to the website were recorded.
The interest generated before the launch resulted in the following steps: 33 banks fully integrated and live on the platform; 500 million naira successfully minted by CBN; 200 million naira issued to financial institutions; more than 2,000 integrated clients; and more than 120 traders successfully registered on the platform.
This interest already aroused by foreign parties is something that should delight the guardians of the national economy. Nigeria has a healthy diaspora remittance value. In 2020, Nigeria ranked among the top 10 countries in the world with the highest diaspora remittances, sharing the same circuit with India, China, Mexico, Germany, France, among others. . The National Bureau of Statistics (NBS) valued diaspora remittances in 2019 at $ 23.4 billion. In 2020, it fell to $ 16.9 billion (a global trend due to the COVID-19 pandemic). The eNaira is expected to boost the management and collection of diaspora remittances, which could help loosen the tight freeze on forex a bit.
More than any other governor in the CBN, Emefiele was the most creative and courageous in trying to defend the naira and develop the Federal Reserve. CBN under Emefiele has undertaken more interventions than at any time to develop the economy by encouraging local production. And it does so at the most critical moment in the country’s economic life, when the price of crude oil has fallen to its lowest point. He hired import traders who milk the country’s forex reserve to import anything and everything, including balloons and cookies, toothpicks and nail clippers. He dared dollar wanglers and forex crooks. Emefiele is doing today what should have been done many years ago when forex was in abundance. He mobilizes to promote local production with scarce currencies while his predecessors wasted a lot of currencies by promoting consumption. If ever there is an award for being the most innovative central banker, Emefiele deserves such a tiara.
He wants Nigeria to move from a consumer economy to a production economy. He wants to end the importation of goods and commodities that could easily be produced locally. He wants Nigerians to rethink their lavish lifestyle that favors exotic products to the detriment and detriment of the national economy.