VIDEO: How Does e-Naira Work In A Digital Economy

    CBDC E Naira Ventures Africa 1536x908 1 1 1

    This is mind-blowing, in June 2021, the Central Bank of Nigeria (CBN) announced plans to launch a digital currency called the ‘e–Naira‘ by 1st October 2021. The questions is how does e-Naira work In A digital economy?

    In this article I have outline it.

    The big advantage of  account-based ownership is that it reduces criminal activities and we know quite well how to effectively protect these.

    What is e-Naira Digital Currency ?

    eNaira is a digital currency to be issued by the Nigerian government with the same value as fiat naira (i.e. physical naira notes). It is to be purchased by the general public through FI and transferred into e-wallets maintained by customers.

    How Does e-Naira Work In A Digital Economy

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    How Does e-Naira Work In A Digital Economy

    The e-Naira will also bring in the vast majority of the unbanked Nigerians who have no bank account but have a phone into the formal financial digital economy.

    With the e-Naira, salary payments and payments for goods and services can be concluded.

    A skilled plumber who is doing business can accept payments on his phone, store them in his wallet, and make transactions with any vendor.

    This digital currency will allow easy transaction but is it different from any other digital currency because it will be issued by a sovereign authority, which is the CBN.
    A digital currency issued by a government works differently from cryptocurrency like Bitcoin.According to the CBN, the e-Naira will aid financial inclusion and propel a cashless policy.e-Naira, which was created to facilitate digital transactions, does not need to be backed with physical cash.It will not grow in value like Bitcoin or other crypto currencies but it will function the same way the Naira does.

    How Does e-Naira Work in a Digital Economy?

    The e-Naira currency will be pegged to the Naira so their value remains the same like stable coins pegged to the dollar.The e-Naira will be created independently of bank accounts; the wallet will be created by financial institutions that will create customer identification through an application product interface.
    It is a legal tender for the entire country, it will have a non-interest bearing Central bank Digital Currency status, a transaction limit for customers and a value-based transaction limit.
    As a National Critical infrastructure, the e-Naira system will be subjected to comprehensive security check, all data and personally identifiable information (PII) will be kept off the ledger and will not be stored on the ledger.

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    Benefits of eNaira Digital Currency 

    • The Governor of Central Bank of Nigeria also listed the benefits of eNaira coin to include;
    • The e-naira currency will icreased cross-border trade
    • Accelerated financial inclusion
    • Cheaper and faster remittance inflows
    • Easier targeted social interventions
    • Improvements in monetary policy effectiveness
    • Payment systems efficiency
    • The e-naira currency will help in Tax collection.

    VIDEO: How Does e-Naira Work In A Digital Economy

    The CBN has engaged a Barbados-based fintech company, Bitt, to help deliver a blockchain-based digital currency, which is due to be unveiled ‘later in the year’, the central bank announced this week.

    The move comes less than a month after the central bank of Ghana, another sizeable West African state, announced an agreement with German company Giesecke+Devrient (G+D) to test a CBDC.

    Conclusion

    Though CBN barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies in February. But for e-naira currency project to be successful and work in a digital Economy, a good number of Nigerians (including companies and government agencies) will have to maintain e-wallets.
    How does e-Naira work in a digital economy? Nevertheless, eNaira will be troubled by some of the current issues of the country including illiteracy, lack of power, lack of internet coverage, and the volatility of the Nigerian currency.

    Central Bank need to enlighten Nigerians on how to really use the new Digital Currency so as to boost its digital economy, when they do this; then the question of how does e-Naira work in a digital economy will be a thing of the past because there will be a lot to show for it.

     

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