X-raying CBN's Plan On e-Naira

by Fred Nwaozor

It’s not anymore news that plans are underway by the Central Bank of Nigeria (CBN) to fully implement the use of the country’s digital currency, the e-Naira. The apex bank recently postponed the planned unveiling of the e-Naira. It could be recalled that it was earlier scheduled to be officially launched on 1st October 2021 to mark the country’s 61st Independence Anniversary. However, in his words, the CBN’s Governor, Mr. Godwin Emefiele disclosed that the proposed e-Naira launch wasn’t going to be a one-off thing, but a ‘journey’ or process that would commence on the said date and continues till further notice. This implies that the process has already begun. Many Nigerians are still ostensibly very much confused or ignorant over the essence of the digital currency or what the technique is all about, hence are apparently itching to be well intimated on the tech-driven policy. A quite percentage of the citizenry might thus far be familiar with the term ‘Crptocurrency’, though may be yet to know its origin, usage, operations and value, or what have you. The Cryptocurrency is a digital form of currency that deals with collection of binary data designed to work as a medium of exchange, whereby individual coin ownership records are stored in a ledger electronically. Its prefix ‘crpto’ makes it seem like something that’s shrouded in secrecy.

Cryto-currency was invented, or came into existence, in 2008 via an entity known as Satoshi Nakamoto in which the identity of the individual owner(s) was unknown. Consequently, it came into use in 2009 when its implementation was released as open-source software. It’s an electronic file stored in a digital wallet App, either on a smartphone or computer. The Bitcoin, which is a type of Cryptocurrency and popularly used worldwide, can be sent from user-to-user on the peer-to-peer Bitcoin network without the need for intermediaries or middlemen. Bitcoin, a decentralized digital currency, is created as a reward for a process known as ‘mining’. Bitcoin mining is the act of creating new Bitcoins by solving a computational puzzle by Bitcoin miners. It is decentralized, in the sense that, all over the global community, it isn’t traded, controlled or operated by the aid of a central bank (CB) or single administrator. It suffices to say that the Bitcoin doesn’t have an official regulator. To get the picture clearer on the essence and use of the Crypto-currency, the Bitcoin particularly, people can send Bitcoins or part of one to your digital wallet if you have any and vice-versa. You can as well send Bitcoin to any other individuals. It’s noteworthy that anyone can purchase Bitcoins using ‘real money’, meaning literally the physical cash of any recognized currency. You can also sell things and ask the buyer(s) to pay you with Bitcoins or any digital currency of your choice.

To start using Bitcoin, all you need to do is to create a Bitcoin wallet, get your first Bitcoin, secure your Bitcoins, then send and receive Bitcoins. For the fact that the Cryptocurrency is not being regulated by any authority leaves much to worry for its teeming users. This is the reason it could be described as a ‘Ponzi scheme’. Little wonder the CBN, in February 2021, out-rightly barred all commercial banks and other financial institutions domiciled in Nigeria from dealing, or facilitating transactions, in Crypto-currencies, and subsequently announced its intention to introduce the country’s digital currency, the e-Naira. It’s worthy of note that the awaited implementation of the e-Naira reportedly makes Nigeria one of the first countries on the African continent, and indeed the globe, to adopt the digitization of its currency. The e-Naira, which shall bear exactly the value of the physical Naira and not attract any interest upon transactions or when stored, is quite different from the Bitcoin because it shall be regulated, unlike in the case of the Cryptocurrency whereby corrupt individuals or criminals can store billions of a certain currency without being spotted or noticed. It’s worth noting that each Bitcoin has its equivalent rate (value) in any currency in the world, hence one can store any currency in form of the Bitcoin. The value of the e-Naira doesn’t change regardless of the circumstance. It shall remain same with respect to the physical Naira. It only changes whenever the ‘real Naira’ appreciates or depreciates in value, as the case might be. It’s therefore needless to assert that the e-Naira is a CB-issued digital currency that provides a unique form of money denominated in Naira. According to the CBN, the e-Naira – which shall be issued and regulated by the Mother bank – can be linked to one’s bank account or Pay-As-You-Go with a prepay option. It shall be stored in a wallet known as the ‘e-Naira wallet’ just as we can safe-keep the physical currency notes in our pocket wallets. The e-Naira wallet is a digital storage device to hold the electronic Naira note.

Prospective users are required to download the e-Naira App via the Google Play Store or Apple App Store. Once it is downloaded, they can on-board themselves, fund their e-Naira wallet using their bank accounts or with cash at a registered agent. The e-Naira shall serve as a medium of exchange over transactions as well as store of value to safe-keep one’s funds. It’s reported that customers, or account owners, can be able to move money from their bank account to their e-Naira wallet with ease. The Mother bank promises that the e-Naira would provide a fast, cheap, reliable and available payment channel as well as support digital economy, improve economic activities and ease cross-border trade. It equally pledges to accelerate financial inclusion and enable cheaper and faster remittance inflows. However, my optimum concern and worry at the moment is the needed tools, such as security and awareness, for successful implementation of the lofty monetary policy. As technology expands by the day, tech criminals extend their tentacles towards unleashing their venom on the unsuspecting users of the new device, hence the compelling need to accompany the digital enhancement with stringent securities and sensitization. The CBN has stated that the e-Naira App would feature and reflect brand values centred on ease of use and efficiency while bearing in mind security. We were also notified that the e-Naira wallet shall comprise an embedded ‘security token system’, which would make the owner’s information unreadable to fraudsters, because tokens are randomly generated every time one makes a payment. This is where adequate and thorough orientation needs to come in. The CBN has already chosen Bitt Inc. – the world’s notable Barbados-based FinTech firm – as its technical partner in developing the e-Naira. Also, we’ve been reliably told that the various banks have commenced the integration of the e-Naira feature into their respective Apps. These corporate entities must henceforth holistically assist the apex bank in breaking down the needed information and facts to a layman’s understanding, for their various clients to be fully aware of the nitty-gritty surrounding the awaited digital currency. Hence, various channels ought to be deployed to achieve this objective.

Taking into cognizance that the e-Naira shall be universal, thus anybody can hold or possess it, the targeted users must be well orientated on the true meaning of peer-to-peer exchange and the fact that the e-Naira doesn’t yield any interest in future as well as other related necessary coaching. As much as I commend this brilliant move by the CBN, I wouldn’t hesitate in reminding them that a wrong implementation of an excellent policy is tantamount to failure. Think about it!