*Says benefits of the digital currency cuts across different sectors of the economy
*eNaira is equivalent to physical currency -Emefiele
*Apex bank releases guidelines for digital currency
Philip Clement, Abuja
President Muhammadu Buhari says the adoption of Central Bank Digital Currency (CBDC), eNaira, can increase Nigeria’s Gross Domestic Product (GDP) by 29 billion dollars over the next 10 years.
Buhari made this submission on Monday while performing the formal unveiling of the Central Bank of Nigeria (CBN) Digital Currency, eNaira at the Presidential Villa, Abuja.
He said that by the introduction of the eNaira, Nigeria had become the first country in Africa, and one of the first in the world to introduce a digital currency to its citizens.
The president said there were Nigeria-specific benefits of the digital currency that cut across different sectors of the economy.
He said: “In recent times, the use of physical cash in conducting business and making payments has been on the decline; this trend has been exacerbated by the onset of the COVID-19 pandemic and the resurgence of a new Digital Economy.
“Alongside these developments, businesses, households, and other economic agents have sought for new means of making payments in the new circumstances.
“The absence of a swift and effective solution to these requirements, as well as fears that central banks’ actions sometimes lead to hyperinflation created the space for non-government entities to establish new forms of private currencies that seemed to have gained popularity and acceptance across the world, including here in Nigeria.
“In response to these developments, an overwhelming majority of central banks across the world have started to consider issuing digital currencies in order to cater for businesses and households seeking faster, safer, easier and cheaper means of payments.’’
According to the president, a handful of countries including China, Bahamas, and Cambodia have already issued their own CBDCs.
Buhari said that a 2021 survey of central banks around the world by the Bank for International Settlements (BIS) found that almost 90 percent were actively researching the potential for CBDCs.
He said that the survey also found that 60 percent were experimenting with the technology while 14 percent were deploying pilot projects.
“Needless to add, close monitoring and close supervision will be necessary in the early stages of implementation to study the effect of eNaira on the economy as a whole.
“It is on the basis of this that the CBN sought and received my approval to explore issuing Nigeria’s own CBDC, named the eNaira.
“This move was underpinned by the fact that the CBN has been a leading innovator in the form of money they produce, and in the payment services they deploy for efficient transactions.
“They have invested heavily in creating a payment system that is ranked in the top ten in the world and certainly the best in Africa.
`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,’’ he added.
President Buhari said the apex bank had also supported several private‐sector initiatives to improve the existing payments landscape, and in turn, had created some of the world’s leading payment service providers.
He said that the efforts to create Nigeria’s digital currency began in 2017.
“While the journey to create a digital currency for Nigeria began sometime in 2017, work intensified over the past several months with several brainstorming exercises, deployment of technical partners and advisers.
“Collaboration with the Ministry of Communication and Digital Economy and its sister agencies like the Nigerian Communications Commission, integration of banking softwares across the country and painstaking tests to ensure the robustness, safety and scalability of the CBDC System.
“Let me note that aside from the global trend to create digital currencies, we believe that there are Nigeria-specific benefits that cut across different sectors of, and concerns of the economy.
“The use of CBDCs can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country.
“Alongside digital innovations, CBDCs can foster economic growth through better economic activities. Indeed, some estimates indicate that the adoption of CBDC and its underlying technology, called blockchain, can increase Nigeria’s GDP by 29 billion dollars over the next 10 years.’’
He said that CBDCs could also help increase remittances, foster cross border trade, improve financial inclusion, make monetary policy more effective, and enable the government to send direct payments to citizens eligible for specific welfare programmes.
“It is on these basis that I am delighted to officially launch the CBN Digital Currency, called the eNaira, and in so doing, we have become the first country in Africa, and one of the first in the world to introduce a Digital Currency to her citizens.’’
Buhari commended CBN Governor, Godwin Emefiele, his deputies and the entire members of staff who worked tirelessly to make the day a reality.
In his remark at the event, the CBN governor, Mr. Godwin Emefiele, said the eNaira has the same value as the physical naira.
The Apex Bank Governor said the eNaira is a legal tender with an equivalent value as the physical naira, but with more functionalities.
“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.
“The eNaira – like the physical Naira – is a legal tender in Nigeria and a liability of the CBN. The eNaira and Naira will have the same value and will always be exchanged at 1 naira to 1 eNaira”, Emefiele said.
Speaking on the milestones the eNaira has achieved since it went live, Emefiele said the website has become a beehive of activities with over 2.5 million visits daily by Nigerians. He also said banks and other financial institutions have been onboarded on the eNaira platform.
He said “33 banks are fully integrated and live on the platform; N500 million has been successfully minted by the Bank; N200 million has been issued to financial institutions; Over 2,000 customers have been onboarded and over 120 merchants have successfully registered on the eNaira platform”.
According to him, the impact includes supporting a resilient payment ecosystem; encouraging rapid financial inclusion; reducing the cost of processing cash; Enabling direct and transparent welfare intervention to citizens.
Others are increasing revenue and tax collection; facilitating diaspora remittances; reducing the cost of financial transactions, and improving the efficiency of payments.
“To de-risk the process, the CBN has given careful consideration to the entire payments and financial architecture and has designed the eNaira to complement and strengthen these ecosystems and have implemented secure safeguards and policies to maintain the integrity of the financial system.
“Specifically, there will be strict adherence to the anti-money laundering and combating the financing of terrorism (AML/CFT) standards in order to preserve the integrity and stability of Nigeria’s payment system”, Emefiele said.
The Central Bank Governor also called on all relevant stakeholders including the Financial Institutions, NIBSS, FinTech groups, Telcos and merchants to collaborate, innovate, deepen and enhance the value of eNaira to Nigerians and to Nigeria.
He expressed the hope of the bank that the eNaira will drive the digital economy agenda and foster a more prosperous Nigeria.
Meanwhile, following the launch of the eNaira by President Buhari, the application for the digital currency introduced by the CBN has become available for download, with more than 5000 downloads within hours of the launch.
This is as the apex bank released regulatory guidelines which stipulate that charges for transactions that originate from the eNaira platform will be free in the first 90 days commencing from October 25.
After this period, applicable charges as outlined in the Guide to Charges by Banks, Other Financial and Non-bank Financial Institutions will become effective.
The eNaira speedwallet app meant for individuals had, as at 4.pm on Monday, seen more than 5000 downloads while the eNaira speed merchant wallet had seen close to 1,000 downloads.
According to the regulatory and issuance guidelines, banks will automatically be onboarded by the CBN while merchants will be onboarded once they download the app and individuals will have to onboard by themselves.
The guideline revealed that there would be different wallets for different stakeholders.
“The eNaira stock wallet belongs solely to the CBN and it shall warehouse all minted eNaira” the guideline stated.
It said that financial institutions were expected to maintain one treasury eNaira wallet to warehouse eNaira received from the CBN eNaira stock wallet.
“Financial Institutions (FI) may create eNaira sub-treasury wallets for branches tied to it and fund them from its single eNaira treasury wallet with the CBN and FI may create eNaira branch sub-wallets for its branches.
“The eNaira branch subwallet shall be funded from the treasury eNaira wallet.
“eNaira Merchant speed wallets shall be used solely for receiving and making eNaira payments for goods and services. eNaira speed wallets shall be available for end users to transact on the eNaira platform.”
To ensure security of funds, the eNaira is expected to have two-factor authentication and other measures.
Meanwhile, daily transaction limits for Tier 0, which is just phone number without verified National Identity Number, was set at N20,000 with a balance limit of N120,000.
Tier1 category, which has a verified number has a N50,000 transaction limit and N300,000 balance limit.
Tier2 and Tier3 categories have daily transaction limits of N200,000 and N1 million as well as a N500,000 and N5 million balance limits while merchants have no limit.
According to a circular signed by Mr. Chibuzo Efobi, the CBN director Financial Policy and Regulation Department, the eNaira will compliment cash as a less costly, more efficient, generally acceptable safe and trusted means of payment and store of value.
“Additionally, it will improve monetary policy effectiveness, enhance government’s capacity to deploy targeted social interventions, provide alternative less costly channel for collection of government revenue and boost remittances through formal channels.
“The guidelines seek to provide simplicity in the operation of the eNaira, encourage general acceptability and use, promote low cost of transactions, drive financial inclusion while minimizing inherent risks of disintermediation or any negative impact on the financial system,” the circular read in part.