Does Nigeria really need CBN’s e-Naira? – Nairametrics

The Central Bank of Nigeria (CBN) has stated that it plans to launch the pilot scheme of its Central Bank Digital Currency (CBDC) on Independence Day. This was mentioned at a press briefing delivered by Rakiya Mohammed, Director, IT Department at the CBN.

She stated that the apex bank has been conducting research in regard to central bank digital currencies since 2017 and may conduct a proof of concept before the end of this year.

The project name is tagged Project “GIANT” and a blockchain technology known as the Hyperledger Fabric Blockchain is being used. The CBN has also dubbed its CBDC ‘e-Naira.’

READ: CBN drafts guidelines to Nigerian banks on e-Naira

In a presentation to banks, as earlier reported by Nairametrics, the CBN gave insight into how the e-Naira would operate, noting that it will be a legal tender for the entire country and have non-interest-bearing CBDC status, a transaction limit for customers and a value-based transaction limit.

According to the presentation also, the CBN will issue its own wallet called the “Speed wallet,” but the wallet will not compete with existing banks. The CBN awaits the creation of “wallets” by banks and other innovators.

READ: Exclusive: Digital Currency partner, Bitt Inc to register in Nigeria, CBN to own stake

How to use the e-Naira

To use the e-Naira to transact, users will have to download the speed wallet, validate their account on the wallet by using either their phone number, National Identity Number (NIN) or Bank Verification Number (BVN). Once done, users can begin to use the wallet. According to the presentation, users will be able to send money using Peer-to-Peer (P2P) transactions through their wallets to other wallet holders, Person-to-Marchant/Business where e-Naira users can pay for items to merchants who have the e-Naira wallet and vice versa.

The presentation also shows how the Government Ministries, Departments and Agencies (MDAs) will be onboarded and use the e-Naira to do remittances to their staff and members of the public once there is mass adoption of the e-Naira and how citizens can make payment to MDAs using the e-Naira.

READ: How CBN’s e-Naira would affect Nigerians

Benefits of the e-Naira

Sean Stein Smith, a professor at the City University of New York, Lehman College, stated, “A CBDC issued and governed by a central bank or other governmental agency will help push the accounting and reporting conversation forward.

“Accounting might not make for splashy headlines, but in order for any crypto, and by extension blockchain, to achieve wider usage, accounting and reporting needs to be standardized.

“Looking at the tax issues linked to cryptocurrency alone highlights the need for standardized and consistent regulatory treatment that does not stifle further innovation.”

The e-Naira will also benefit as it will make governmental remittances easier. The case of the palliatives given during the lockdown last year, where many Nigerians did not receive theirs, can be solved if the government can easily remit money to its citizens. The e-Naira will also be able to better implement the CBN’s cashless policy.

Another point will be the reduction in the need for printing money in the long term. As more people adopt the CBDC as a means of payment, the need for paper currency will drop and the government can spend less on printing since they can easily issue new coins or e-Naira through the Hyperledger Fabric Blockchain. Data from the Central Bank of Nigeria‘s annual report, which was compiled by the currency operations department, shows the nation spent a total of ₦307 billion on printing banknotes between 2014 and 2019.

In addition, the cases of financial fraud can be easily tracked as the government will be able to monitor the flow of money in and around the country as it provides transparency and is difficult to counterfeit.

With the use-case explained let’s address the elephant in the room. Does Nigeria really need a CBDC?

The Nigerian banking system is one of the most sophisticated in the world and the banking system continues to advance its technological strength. In Nigeria, domestic intra bank transactions are done within seconds and at most minutes, a feat the United States was only able to achieve in 2017 through the creation of Zelle.

Before Zelle, fintech products like CashApp dominated instant transfers in the U.S. The U.S commercial banks took 2-3 days to transfer money between banks and when they realized a lot of users started adopting these fintech applications, they started integrating Zelle into their system to foster these instant payments between banks so as to meet up with the competition.

Asides from our technological strength, the average Nigerian transaction involves the use of four payment methods which are all instant; Point of Sale (POS) machine, Online Bank Transfer, USSD Code enabled transfers and fiat currency. The average Nigerian retailer accepts at least one of these payment methods when a transaction is about to take place. If the intent of the government is to reduce the use of paper money, the POS systems and online transfers can be encouraged through targeted campaigns, just like the cashless policy campaign in 2012.

Dipo Fatokun, CBN’s former Director of Banking and Payment System, defined financial inclusion as the access to financial services that are available to the adult population in any given economy. A major component of the e-Naira is the need for smartphones. This poses a problem because according to Pew Research Center, only 32% in Nigeria use smartphones. Nigeria’s population is 206 million people and this represents approximately 66 million people. Another report from the Guardian states that Nigeria has roughly 170 million mobile phone users based on subscriptions but only about 25 and 40 million users have smartphones which represent only 10-20% of the population.

Since the CBN’s mandate also includes financial inclusion, the proposed e-Naira limits the number of people within the country that can have access to a digital wallet, let alone, a CBDC.


Although one could make a case that the use of CBDC helps to better monitor illicit transactions within the country, but in the real world, a Nigerian CBDC will be too costly to implement and may be rendered useless quickly when compared to other systems that exist. The banking system is sophisticated enough to handle transactions as a means of payment. The central bank is better off spending its time and resources on pressing issues like how to combat double-digit inflation.

According to Olumide Adesina, a writer for CoinDesk, “The CBN aims for the CBDC to increase financial inclusion rapidly and easily. Creating and holding funds for citizens in a central bank account could offer better access to financial services for the unbanked or underbanked.

“However, some economists also believe the CBN can spend in deficit and shift funds directly to citizens without worrying about the national debt in times of economic hardship. In other words, a CBDC could present an obvious inflation risk.”

He further stated, “This would also enhance control over the level of access a Nigerian citizen has to a financial system, particularly if the citizen attempts to engage in behaviours considered to be a threat by the financial authority.”



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What you need to know about CBN’s digital currency (E-Naira)

The Central Bank of Nigeria (CBN) announced in June that it will launch its digital currency by the end of 2021. To reaffirm this development, Rakiya Mohammed, CBN director of information technology, stated in a private webinar that the apex bank would launch its digital currency pilot scheme on October 1, 2021.

Central Bank Digital Currencies (CBDC) are becoming increasingly popular around the world. They are a response to the global rise of digital payment solutions and a component of various central banks’ response to the influence of cryptocurrency in their respective countries.

Rakiya Mohammed explained that approximately 80 per cent of central banks worldwide are currently exploring the possibility of issuing their central bank digital currency (CBDC), and Nigeria could not afford to fall behind. The apex bank had been researching since 2017 regarding the development of a digital currency.

CBDC in Nigeria

Senator Ihenyen, president of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), explained that CBDC comes in two varieties: wholesale CBDC and retail CBDC. This classification is based on the intended user. While retail CBDC allows the CBN and citizens to have direct financial relationships, wholesale CBDC lets banks and financial institutions act as intermediaries between the CBN and the citizens. The new Nigerian digital currency will operate on a hybrid system, which is a combination of both. The digital naira would be issued by the Central Bank of Nigeria and held directly in the digital wallets of Nigerians. CBDC, like fiat currencies, would be recognized as a form of payment and regulated by the CBN.

According to Mohammed, the project tagged ‘GIANT’ will use the Hyperledger Fabric Blockchain for operation. The Hyperledger Fabric blockchain is a private and permissioned blockchain network designed by a computer hardware company, International Business Machines Corporation (IBM). They are permissioned blockchains in that each party is identified and every transaction is authenticated, authorized, validated, and tracked. The CBN determines who can get on the platform and can approve or override a transaction if it deems fit, unlike bitcoin, where transactions are approved upon the agreement of majority nodes.

When the pilot scheme is finally launched, the value of the CBN’s digital currency will most likely be tied to the naira. And like China’s digital yuan, which functions as a replacement for the yuan, i.e. one digital yuan equals one physical yuan. The CBN’s digital currency will experience the same depreciation and inflation as the naira.

CBDCs and cryptocurrency

Research into the development of Nigeria’s digital currency began in 2017. Measures to restrict crypto exchanges first appeared in Nigeria, Africa’s largest Bitcoin market, in 2017. In February, the CBN issued a circular to banks and financial institutions stating that transactions in cryptocurrencies and facilitating payment for cryptocurrency exchanges were prohibited due to the risk of investment loss, money laundering, terrorism financing, illicit fund flows, and other criminal activities. Banks and financial institutions were also directed to identify individuals or entities that engage in cryptocurrency transactions.

The proposed launch of the digital currency has many believing that the country’s ban on cryptocurrency trading was heavily influenced by the CBN’s incoming digital currency, as the CBN does not want to create a competitor for its system. This has also contributed to their belief that cryptocurrency and CBDC work in the same way.

However, although CBDCs and cryptocurrency (Bitcoin, Ethereum) are both digital currencies, one important distinction is that while cryptocurrency is decentralized and users are anonymous, CBDCs are centralized. This means cryptocurrencies cannot be monitored, but CBDCs issued by the CBN can be monitored and regulated. Having registered the fact that both digital currencies are different in operations, there is a silver lining in the dark cloud of cryptosystem in the country.

There is a slight hope that the cryptosystem in the country would be revitalized. In his article What CBN’s digital currency could mean—transparency vs surveillance, Benjamin Dada explained that the CBN would likely devise a way for crypto companies to be reintegrated into the financial ecosystem. He explained that while crypto companies may not be able to make direct debits from financial institutions, CBN’s digital currency may be used for crypto transactions.

Dada expressed concern about the digital currency materializing before the current CBN governor’s term expires in 2024, citing the fact that CBDCs often take a long time to create and test. China’s digital yuan has been in the works since 2014 (7 years) and has yet to be fully implemented.

When the scheme is eventually launched, Nigeria will join other countries across the globe and Africa racing to develop its CBDC. Some of these countries include South Africa (digital Rand), Tunisia (eDinar), Ghana (e-cedi), Sweden, Japan, South Korea, and Russia.

China (digital yuan), Sweden (e-krona), Bahamas (sand dollar), Eastern Caribbean (DCash) are among the few countries that have officially launched their national digital currency.

Benefits of the digital currency

The CBN listed the benefits of the digital currencies to include macro-management and growth, cross-border trade facilitation, financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement and targeted social intervention. Other benefits are the reduction in the costs of minting and printing physical currency, a reduction in fraudulent activities, counterfeit money in circulation and armed robbery.

Although the CBN didn’t address the disadvantages, the reality is that the proposed digital currency cannot be devoid of problems. Some obvious disadvantages are that a significant number of Nigerians are not adept in the use of technology and most importantly, there would likely be unrestrained monitoring of the transactions of Nigerians.

Written by Adekunle Agbetiloye


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The Central Bank of Nigeria will conduct its central bank digital currency pilot on October 1






The Central Bank of Nigeria (CBN) officially announced that it will officially test its central bank digital currency (CBDC) on the Hyperledger Fabric blockchain on October 1.

Rakiya Mohammed, Director of Information Technology at the Bank of Nigeria, stated in a webinar that a corresponding proof of concept (POC) is possible by the end of this year at the latest.

This “GIANT” project will reportedly operate on the Hyperledger Fabric blockchain, dedicated to providing private companies with blockchain-based products, solutions and applications.

The Central Bank of Nigeria stated that around 80% of central banks around the world are either issuing CBDCs or have already issued their CBDCs, including Thailand, China, the United States, South Korea, Ghana, the Philippines, etc.

The Central Bank of Nigeria also stated that Nigeria should also join the CBDC track to facilitate the macro control of the country and the facilitation of cross-border trade.

Since before, Nigeria has always maintained a hostile attitude towards cryptocurrencies. As Blockchain.News reported on February 8 this year, the Central Bank of Nigeria (CBN) has redoubled its efforts to cripple cryptocurrency transactions in the country, claiming that they are a breeding ground for illegal activities.

Image Source: Shutterstock


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CBN to launch own digital currency October 1

The Central Bank of Nigeria (CBN) says it will launch the pilot scheme of its digital currency by October 1, 2021.


The resolution was made during a private webinar on Thursday in which CBN and its stakeholders outlined a digital currency initiative.

In June, the apex bank announced plans to launch its own digital currency before the close of the year.

It said about 80 percent of central banks globally are currently exploring the possibility of issuing their central bank digital currency (CBDC) and Nigeria could not be left behind.


At the end of the stakeholders meeting, Rakiya Mohammed, CBN director of information technology, explained that the apex bank had been conducting research since 2017 in regards to developing a digital currency.

Mohammed said CBN may conduct a proof of concept before the end of this year.

According to her, the project name is tagged ‘GIANT’ and it will use the Hyperledger Fabric blockchain.


The Hyperledger Fabric is an open source project that acts as a foundation for developing blockchain-based products, solutions, and applications using plug-and-play components that are aimed for use within private enterprises.

CBN said the importance of its digital currency will include macro management and growth, cross border trade facilitation, financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement, and targeted social intervention.

If the pilot scheme is eventually launched, Nigeria will join other countries across the globe and Africa racing to develop it’s CBDC.

Some of these countries include South Africa (digital Rand), Tunisia (eDinar), Ghana (e-cedi), Sweden, Japan, South Korea, and Russia.


Meanwhile China (digital yuan), Bahamas (sand dollar), Eastern Caribbean (DCash) are among the few countries that have officially launched their own national digital currency.

Earlier this year, CBN banned cryptocurrency transactions in the country and warned that cryptocurrencies pose the risk of loss of investments, money laundering, terrorism financing, illicit fund flows and other criminal activities.


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