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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Experts Call For Caution As CBN Plans eNaira

With an October date set for the pilot stage of the e-Naira, Central Bank of Nigeria’s planned digital currency, financial technology specialists have said the date may not be feasible even as they warn the apex bank to be cautious and not rush into it.

CBN director of information technology, Rakiya Mohammed, had at a private webinar mentioned that the pilot stage of the digital currency is expected to kickstart by October, noting that the apex bank had been conducting research sin.ce 2017 with regards to developing a digital currency.

Mohammed, who stated that CBN may conduct a proof of concept before the end of this year, said the project is tagged ‘GIANT’ and will use the Hyperledger Fabric blockchain. The Hyperledger Fabric is an opensource 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.


Hyperledger’s executive director, Brian Behlendorf, said there had been an increase in the use of Hyperledger’s opensource blockchain technology, including Hyperledger Fabric, for Central Bank Digital Currency (CBDC) and other currency projects.

“However, since our technologies are all opensource, we often don’t know all the ways and places Hyperledger software is being used, especially prior to launch,” Behlendorf said in an email.

“If Nigeria’s digital currency project is built on Hyperledger Fabric, that would be welcome news that further validates Fabric as a CBDC platform.”

Rise of digital currencies

The proposed eNaira is a type of Central Bank Digital Currency (CBDC) which over 80 per cent of central banks across the world are currently exploring. CBDCs are new variants of central bank fiat money that are different from physical cash and reserves/settlement accounts.

LEADERSHIP Sunday learned that CBDC is a digital representation of sovereign currency that is issued by a jurisdiction’s monetary authority and a direct liability of the central bank that issued it. Contrary to some beliefs, CBDCs are not meant to replace cash and bank deposits but to coexist as additional form of Central Bank issued money.

CBDCs are also not to be confused with crypto assets such as Bitcoin, Ethereum and the like which are privately issued tokens based on cryptographic techniques and denominated in their own unit of account. Crypto assets are thus fundamentally different from other kinds of digital money such as the CBDC which basically utilizes technology to represent a country’s official currency in digital form.

The Bank of England (BOE) was the pioneer to initiate the CBDC proposal. Following that, central banks of other nations, like People’s Bank of China (PBoC), Bank of Canada (BoC), and central banks of Uruguay, Thailand, Venezuela, Sweden, and Singapore, among others, are looking into the possibility of introducing a central bank-issued digital currency.

Currently, three countries, the Bahamas, Eastern Carribean and China, have begun the use of CBDCs, while Canada, South Africa, Japan, Ecuador, Sweden, Singapore and Hong Kong are already at advanced stage. The United States, Great Britain, Jamaica, United Arab Emirates as well as Mexico are still at the research stage. The role of cash is declining, giving impetus to digital currencies.

Why we need eNaira

Founder/chief executive officer, Gboza Gbosa Technology Ltd, Ade Atobatele, who spoke to LEADERSHIP Sunday on the subject of the planned eNaira, explained that digital currencies are just like cash, only that are digitalised.

Not to be confused with cryptocurrencies, he said “the only thing they have in common is that they are digital CBN’s primary mandate is monitoring interest rates and monetary policies.

“CBDC can be a tool to help CBN’s control of the money supply. The beauty of CBN is that they are a licensing authority which means they can license people for different things. They can call upon them to do their bidding whenever they want,” he said.

Also, founder of Blockchain Mobile Technologies, Stanley Okwu, sees the CBN’s e-Naira as a welcome development. He, however, said such innovation should not be rushed as he called on the apex bank to seek assistance from both local and international experts so as not to run into it unprepared.

While noting that the digital currency would make it easier to transfer remittances into the country, lead to creation of job and allow new ways for digital services in the country, he said “digital currency, like cryptocurrency, is not built in few months.

“It takes a well- organised road map. Therefore, within this timing, CBN should seek out experts, both locally and abroad, to assist them in order to avoid running into trouble. I believe the CBN will get it right if they seek out good hands and experts to work with,” Okwu added.

Likewise, financial technology expert and chief executive of eMaginatons Ltd., Sola Fanawopo, stressed the need for caution. According to him, the apex bank must take a proper stand before it launches eNaira.

“They have to be very careful. However, we must be bold and courageous on what we want to use digital currency for. That decision must be taken and it may be contentious among the financial institutions in the country. I will expect CBN to do wide consultations among the financial institutions, banks, Fintechs, non-banking operators and everybody, including consumers. After wide consultations, CBN can take a decision and the objective can be very clear.

“The October date may not be feasible. China has been on its own for the past five years before it came to the market, so we need to plan very well before taking a decision as this will be better for the country and everybody,” Fanawopo said.

Also, the managing director, New Horizons Systems Nigeria, Tim Akano, told LEADERSHIP Sunday that the CBDC is the way futuristic countries are going; thereby CBN cannot afford to be left behind.

He urged the “CBN to begin its pilot in a certain location such as Ogun State since it has the largest number of industries and universities in the country to test the eNaira before it can be extended to other parts of the country, just like China did with Digital Yuan.”

Note of caution on CBDC

The Clearing House, the bank-owned operator of the only private United States of America payments system, in a statement issued on July 27, 2021, cautioned the Federal Reserves, the US central bank, that a CBDC could destabilise both the domestic and foreign banking and financial services sectors.

Stressing the need to proceed with caution as a CBDC could do more harm than good, the Clearing House, in a report entitled, “On the Road to a U.S. Central Bank Digital Currency: Challenges and Opportunities,” said the “introduction of a U.S. CBDC has the potential to destabilise both the domestic and foreign banking and financial services sectors, and to make illicit activity using the U.S. dollar easier.”

Executive managing director of the Clearing House, Robert Hunter, in an interview quoted by PaymentsDive, noted that while it is not opposed to the idea of a CBDC, it views the real-world possibility of a U.S. CBDC as fraught with questions about its potential purpose, design and risks.

“Particularly in times of stress, it is highly likely that there would be capital flight into a central bank digital currency,” and that could have a destabilising impact on financial institutions, he said.

Meanwhile, the CBN is looking up to the eNaira to help achieve macroeconomic management and growth, cross border trade facilitation, financial inclusion, monetary policy effectiveness, improved payments efficiency, revenue and tax collection, remittances improvement as well as targeted social interventions.

With the African Continental Free Trade Area (AfCFTA), Fanawopo believes the eNaira could become a critical tool in addressing challenges faced in African trade. “We must be specific in the issues we want to use it to address, such as using it to solve the problem that is identified with physical currencies,” he said.

What CBN plans to do with eNaira

CBN director, Rakiyat Mohammed, had noted at the end of the last Bankers’ Committee meeting that the CBDC would be a tool in addressing the financial inclusion challenge of the county.

“Our target for this year was to achieve 80 per cent of financial inclusion and we are at about 60 per cent now and at the rate that we are going we are not likely to meet this target.

“The CBDC will accelerate our ability to meet this target because regardless of where you are just like the fiat cash anyone including my grandmother in the village will be able to have CBDC and use and she will be able to buy anything in Ghana or South Africa or us without having to transfer cash and at a very reduced cost. So, it will reduce the cost of transferring money. In order to complement the federal government’s effort in achieving a digital economy,” she stated.

The model of the eNaira according to the CBN is such that it designs, creates and distributes the CBDC to financial institutions as well as other licensed service providers who in turn provides it to businesses and individuals. The eNaira has the potential to reduce cash handling costs by 5-7 per cent, promote digitisation of cash and development of e-commerce

Benefits of eNaira

Speaking on the benefits of the eNaira to the Nigerian economy, Fanawopo noted that asides from strengthening the identity system in the country, a CBDC will help address the issues of cybersecurity, improve literacy level in the country, reduce the cost of transaction, thereby enabling increased confidence in the system.

He further stated that it would challenge financial institutions, including fintechs, to be more creative and innovative. This, according to him, will spur employment among the teeming tech-driven youthful population of the country.

On his part, the financial counsellor and director of the Monetary and Capital Markets Department, IMF, Tobias Adrian, said that central bankers everywhere are closely following the experience in the Bahamas, trying to discern the lessons of the actual issuance of the “Sand Dollar.”

He, however, warned that central banks should design CBDC so that they help support a stable and efficient international monetary system.

“If we design digital currencies with caution and with precision — and if we frame their adoption within legal and regulatory systems that maximise their benefits and minimise their risks — we could be on the verge of an era that fulfils the promise of transformation,” Adrian added.


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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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Central Bank Digital Currency to be launched in Nigeria in October

  • CBDC plans of Nigeria have taken off as the pilot project will start on October 1, 2021
  • The Central Bank Digital Currency to offer several benefits to the country along with a stable financial economy
  • However, there are risks of investing in cryptocurrencies as Nigeria had earlier restricted trading in them

The goal was made during a private online class on Thursday wherein CBN and its partners illustrated an advanced cash drive. It said around 80% of national banks universally are presently investigating the chance of giving their national bank computerized money (CBDC) and Nigeria couldn’t be abandoned.

In June, the apex bank declared designs to dispatch its own advanced cash before the end of the year. Rakiya Mohammed, CBN head of data innovation, clarified that the summit bank had been directing exploration since 2017 concerning fostering advanced money.

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Mohammed said CBN may lead a proof of idea before the finish of this current year. The task name is labeled ‘Giant’ and it will utilize the Hyperledger Fabric blockchain.

CBDC to offer many benefits

The Hyperledger Fabric is an open source project that goes about as an establishment for creating blockchain-based items, arrangements, and applications utilizing fitting-and-play segments that are focused on use inside private undertakings.

CBN said the significance of its computerized cash will incorporate full scale the board and development, cross boundary exchange help, monetary consideration, financial approach viability, further developed installment productivity, income charge assortment, settlement improvement, and designated social intercession.

On the off chance that the pilot plot is in the long run dispatched, Nigeria will join different nations across the globe and Africa dashing to foster it’s CBDC. A portion of these nations incorporate South Africa (computerized Rand), Tunisia (eDinar), Ghana (e-cedi), Sweden, Japan, South Korea, and Russia.

In the meantime China (advanced yuan), Bahamas (sand dollar), Eastern Caribbean (DCash) are among the couple of nations that have formally dispatched their own public computerized cash.

Risks in cryptocurrency investments

Recently, CBN restricted digital currency exchanges in the nation and cautioned that digital currencies represent the danger of loss of speculation, tax evasion, psychological warfare financing, illegal asset streams and other crimes.

An individual present at the gathering who requested to stay mysterious so he could talk openly revealed to CoinDesk that the arranged beginning date for the pilot had consistently been Oct. 1 and that the advanced cash will be based on the Hyperledger Fabric blockchain.

Hyperledger Executive Director Brian Behlendorf revealed to CoinDesk that there has been an increment being used of Hyperledger’s open source blockchain advances, including Hyperledger Fabric, in national bank computerized money (CBDC) and other cash projects.

Be that as it may, since our advancements are altogether open source, we frequently don’t have a clue about all the ways and spots Hyperledger programming is being utilized, particularly before dispatch as Behlendorf stated in an email. In case Nigeria’s advanced cash project is based on Hyperledger Fabric, that would be very positive news that further approves Fabric as a CBDC stage.

At the press preparation in June, Mohammed said an advanced naira could make settlement moves simpler for Nigerians working abroad. In 2020, Nigeria was one of the top settlement beneficiaries all around the world.

During Thursday’s private gathering, the bank purportedly said computerized money could work on monetary development, cross-line exchange help and monetary consideration in addition to other things, as per Nairametrics. CBDCs, or state-given advanced fiat cash, are regularly promoted as an approach to counter secretly given cryptographic forms of money that some contend have the possibility to destabilize a country’s sway.

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