Businesses and Individuals must Transact with E-Naira Payment, CBN Alerts

Economic growth and development are the fundamentals of good standard of living and a strong economy.  Innovating in the money market and labor market are the tools government and policy makers use to regulate the economy and give dividends of good governance to their citizens. CBN’s proposal of introducing E-Naira to the economy is a laudable innovation that should be encourage and nurtured for faster economic growth.

Central Bank Digital Currency it’s a scheme that allows the CBN to create digital currency. E-Naira is not a cryptocurrency but a payment system that is orchestrated to complement existing payment platforms in the economy. The CBN decided to create an alternative to physical cash by creating a virtual one through the scheme called CBDC. The beauty of CBDC is it could be use across borders and it is very profitable for remittance. The first country to create a virtual currency was Finland in 1992 since then nations have been using it for different purposes.

The emergence of cryptocurrency has increased the appetite by Central banks globally to continue to exist financially. The cryptocurrency surged proved that financial policy makers have to be innovative in the 21^st century. The disruptive scope of digital currency is a confirmation that CBN is adapting to the realities of 21^st century Nigeria. The involvement of China in digital currency is a clarion call for emerging markets prompting many countries to show desire in its adoption. Presently, many countries have already shown interest in digital currency adoption, Australia, Singapore, South-Africa, and Malaysia. This decision is to position their economies for trade and economic growth.

E-Naira would be launch on October 1, 2021, and the modus operandi starts with your bank which provides your details to the CBN. The central bank on receiving your account details generates a CBDC code for you that makes you relate with your bank and the CBN. Your account with the CBN would be called Wallet and it would co-exist with your commercial bank’s account.

The essence of the wallet with the CBN is purely for transaction purpose and not for investments which shall not attract any interest. Your wallet with the CBN allows you perform any transaction through any financial channel in the country because the CBN serve as the guarantor. The regulation of the wallet and your bank account is strictly the CBN’s function.

E-Naira hopes to promote financial inclusion in the economy, and allow customers to avoid discrepant bank charges on transfer and withdrawals for businesses and individuals. The guidelines released by the CBN have thrown more light into the digital currency debate.  The zero charges on all transaction done through the wallet is the innovative stride the CBN exhibited and it is coming into the market at the right time.

The CBN has expressed the real reason of the adoption of the digital currency which is the issue of currency and its management. The cost of printing the local currency is too high and it would surely help in taming inflation because printing cost of the naira has effect on the economy.

The technical support of the digital currency in Nigeria is in partnership with Bitts Inc which is a fintech company in the Caribbean.  The beauty of the partnership is the knowledge transfer that would be benefitted by the young fintech companies in the country.

The CBN Director, Payment System Management, Mr. Musa Jimoh, confirmed this on an interview on the “Business Morning” show on Channels Television on Monday. He reiterated, “Today, anywhere you present naira to pay, compulsorily it must be accepted because it is our fiat currency. So, the same way naira is accepted that you can’t reject it, is the same way the E-naira must be accepted. Anywhere in this country where E-naira is presented it must be accepted. So, merchants must accept E-naira as a means of payment.” H e further said, “The liability of the E-naira money is directly on CBN which is similar to the cash you hold. The liability of the cash you hold today rests with the CBN. So, it gives Nigerians the opportunity to bank with the CBN,”

The CBDC platform created by the CBN shows that the central bank is adapting to the realities of the digital payment system of the 21^st century.