Have You Used The eNaira? How Far Has The Nigeria’s Digital Currency Fared ?

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5 min, 27 s

The first year anniversary of the live launch of the eNaira is coming up on October 25, 2022. It will be exactly one year since the introduction of Central Bank Digital Currency CBDC in Nigeria. eNaira was  launched by President Muhammadu Buhari to be used as legal tender in the country.

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Thus Nigeria became the first African country to introduce a digital currency as it joined the Bahamas and the Eastern Caribbean Central Bank in being among the first jurisdictions in the world to roll out national digital currencies.

During the launch, the CBN Governor, Godwin Emefiele, noted that the introduction of the eNaira came after four years of research conducted by the apex bank.

The eNaira is a digital currency denominated in naira and serves as both a medium of exchange and a store of value, according to the CBN

The CBN governor said it integrated 33 banks into the eNaira platform with N500m successfully minted by the apex bank for the takeoff of the programme.

The regulator said while N200m had been issued to financial institutions, over 2,000 customers had also been on-boarded as of the time of the launch.

The CBDCs speed wallet app and merchant wallet also became available for download after eNaira went live.

As of December 2021, the eNaira consumer wallet recorded over 583,000 downloads while the merchant wallet was downloaded 83,000 times, with downloads occurring in over 160 countries.

The CBN also recorded over 34,000 transactions through the wallets amounting to over N188m, according to the apex bank’s Controller, Enugu branch, Ch’Edozie Okonjo.

Note at the period of its launch, the eNaira was projected to add $29 billion to the Nigerian gross domestic product (GDP) in the next 10 years, according to the government.

In the words of the CBN governor, “Transactions on the system has been superfast and remains free for now, by design.”

Also Read: Lenders Are Frustrating eNaira CBDC Adoption ; Central Bank Governor.

The Challenges So Far For eNaira.

Despite the high expectations and hype around the Central Bank of Nigeria’s digital currency- the eNaira- major retailers and vendors in the country are yet to adopt it 10 months after launch.

Checks by our correspondent across some chain stores and shopping outlets channels in some parts of the country showed that there is a rather slow adoption of the digital currency as a medium of exchange.

Cashiers at ShopRite and Spar who spoke on condition of anonymity because they were not authorised to speak on the matter, said they weren’t aware of the existence of the eNaira or how it would function.

Calls made to the customer service phones of e-commerce giants Jumia and Konga also revealed that no provision had been made for eNaira payment on these platforms.

The customer care agent of Konga however said, “We are working to ensure that this payment method becomes available. Once this is done, we will communicate it to our customers.”

One of the reasons eNaira usage is still low is because the eNaira app is split in two applications; eNaira speed wallet (non-business users) and eNaira speed merchant wallet, with both recording about 600,000 downloads combined as of November 27 as disclosed by the CBN boss.

Lack of Strategic Marketing Campaign Communication For eNaira.

Worried by the slow adotion of the eNaira, the CBN knocked commercial banks across the country for not promoting the digital currency.

Officials of the CBN took turns at the CBN Fair which held in Kaduna and simultaneously in Kano, to explain the nitty-gritty of eNaira initiative to the public.

Head, Development Finance Department of the CBN, Aminu Muhammad, an assistant director, said financial institutions under the purview of the CBN were supposed to play these critical roles in growing our economy.

Interestingly, as part of efforts aimed at achieving massive eNaira adoption, the CBN in collaboration with the Bankers Committee recently conducted an eNaira road show at Balogun and Tejuosho markets in Lagos State.

The team, comprising CBN staff and representatives of some commercial banks, landed at Balogun market recently at Tejuosho market in Yaba all in Lagos. That’s poor, Lagos is too large for a marketing campaign to be centred . What about other parts of Lagos? What about the remaining 35 states and FCT.

An intensive strategic marketing communication campaign should be adopted by the CBN to get the message to every individual in Nigeria.

Putting eNaira fears Among Nigerians To Rest.

Giving insights on the benefits of the eNaira, Dr. Iwa Salami, Associate Professor in Law at the University of East London, who shared her candid thoughts with an online platform recently, said there is a need to educate Nigerians on the difference between the digital representation of cash deposits in bank accounts and the eNaira in digital wallets.

While a plausible explanation about a digital currency as a means of payment or money that exists in a purely electronic form, she said, central bank digital currencies are issued and regulated by the nation’s monetary authority, or central bank, and backed by the government. “They are different from existing electronic central bank money, which is provided by central banks but can only be used by banks and selected financial institutions. When financial institutions pay each other, they pay in reserves from accounts held with a central bank.”

“The second risk is operational. For example, if IT systems were to fail or if there were technological glitches, or cyber-attacks. These can compromise user privacy. The Central Bank will need robust technology and IT security systems. Closely linked is reputational risk to the Central Bank if the operational risks materialise. They are likely to have a huge impact on its credibility and reputation both domestically and globally.

“When the Central Bank takes on this new function – issuing the eNaira and maintaining a central ledger of all transactions – it might find it harder to perform its key function of ensuring a safe and sound financial system since its focus could be diverted towards managing the eNaira system in addition to carrying out its other functions in the domestic economy.

“A possible way to lighten this burden is through creating synthetic central bank digital currencies. This idea was put forward in 2019 in an International Monetary Fund paper. In such a system, the central bank does not directly manage the system, but outsources tasks to private institutions. Financial institutions issue the digital currency, which is fully backed by central bank money.”

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