The Central Bank of Nigeria (CBN) is intensifying efforts to expand the use of its digital currency, the eNaira, as part of a broader strategy to position the country as a global leader in central bank digital currency (CBDC) adoption.

According to the CBN’s 2024-2025 Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines released on Monday, the expansion will facilitate payments into government accounts and enable ministries, departments, and agencies (MDAs) to initiate payments to vendors and beneficiaries via eNaira.

The guidelines stated, “The CBN shall continue to work towards enabling the use of eNaira wallets/channels by payers to pay into government accounts at the CBN and allow ministries, departments and agencies to initiate vendor/beneficiary payments from their respective eNaira wallets.”

This move comes as Nigeria is recognized among the top three countries globally for significant traction in CBDC adoption, alongside the Bahamas and Jamaica, according to a report by the U.S.-based Atlantic Council. The report highlighted that as of September 2024, these three nations are the only ones to have fully launched their CBDCs.

“In Nigeria and the Bahamas, CBDC issuance has increased substantially,” the report noted, further affirming Nigeria’s leadership in the CBDC space. Nigeria’s eNaira, launched in October 2021, made it the first African nation and the second globally to roll out a digital currency after the Bahamas’ “Sand Dollar.”

Despite challenges, including cash shortages and disputes over cryptocurrency operations in Nigeria, the CBN has partnered with banks, fintech companies, and merchants to promote the adoption of the eNaira.

The central bank’s push comes as global interest in CBDCs accelerates, with 134 countries representing 98% of the world’s GDP exploring digital currencies. The Atlantic Council report added that 66 countries are in advanced stages of development, with 44 ongoing CBDC pilots worldwide.

According to the CBN’s quarterly statistical bulletin for the first quarter of 2024, Nigeria had N3.87 trillion in currency circulation as of March, with the eNaira accounting for N13.98 billion, representing approximately 0.36% of the total currency in circulation.

While the eNaira has maintained 24/7 availability since its launch, adoption remains slow. A report by the International Monetary Fund marking the first year of the eNaira’s introduction noted that only 1.5% of eNaira wallets were engaged in weekly transactions.

As the CBN continues its efforts to bolster digital currency adoption, the focus remains on addressing these challenges and promoting the eNaira’s integration into everyday transactions.

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TECH DIGEST- In a historic moment for the digital currency world, the Bitcoin Network has achieved an unparalleled feat, processing its one billionth transaction after 15 years of operation.

As reported by CoinTelegraph, the landmark transaction, numbered 1,000,000,000, was officially confirmed in block 842,241, marking a pivotal moment in the evolution of Bitcoin. Clark Moody’s dashboard, a trusted Bitcoin user, played a pivotal role in tracking this significant event, noting the occurrence at precisely 9:34 pm UTC on May 5.

This milestone arrives exactly 15 years, four months, and four days after the inception of Bitcoin, with its enigmatic creator, Satoshi Nakamoto, mining the network’s inaugural block on January 3, 2009.

Throughout its remarkable journey spanning 5,603 days, the Bitcoin network has consistently processed an average of 178,475 daily transactions, showcasing its robustness and resilience in the face of evolving market dynamics.

The surge in daily transactions during Bitcoin’s fourth halving event on April 20 captured global attention, peaking at a record high of 926,000 transactions on April 23. However, the subsequent decline in daily transaction volume, totalling 660,260 on May 4, suggests a period of consolidation and recalibration within the Bitcoin ecosystem.

Despite recent fluctuations, Bitcoin’s current price stands at $63,750, reflecting a notable increase of over 12% since hitting a two-month low of $56,800 on May 2. Nonetheless, it remains down by 13.6% from its all-time high of $73,740, recorded on March 13.

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TECHDIGEST – Regardless of technological and financial innovations, money is a form of technology that has been around for a few thousand years but has changed little in terms of its fundamental nature and effects.

It is heartwarming when the Minister of Communications and Digital Economy, Prof. Isa Pantami announced policy initiatives that promote investment in infrastructure in the Nigerian telecom industry in order to deepen connectivity to enhance the nation’s growth and development.

Speaking on the sideline of the reception marking the landing of the Equiano undersea Cable System in Nigeria, Pantami said that Government is driving the implementation of existing digital economy-oriented policies for the transparent and secured online transactions by also encouraging foreign and local investment in infrastructure projects such as the way Google and its co-investors have done.

READ ALSO : eNaira is safe from hackers – CBN

Money as we know it is nearing the end of its life cycle. People are eager to declare the end of new technology and dismiss it as unavoidable. Every technology is eventually superseded by a better, more advanced one.

Now it’s happening with money, which is an out-of-date technology in which we print pictures on pieces of paper and assign a value to them because the government says so.

But, historically, the currency has had its expiration date due to changes in diplomatic agreements or technological development – we’ve gone from seashells, cowries, gold coins, coins, paper, and now digital. We’re already witnessing the transition to a cashless society, but is there more to this shift?

Money has the power to build and destroy civilizations. Money plays an undeniably important role in everyone’s lives today, whether they recognize it or not. Money’s introduction can be considered the final stage in bringing the world to where it is now. From the technology we use to the conflicts we fight, the power of finance can be found everywhere.

We are a generation that is equipped to thrive in the digital age. Paper money, on the other hand, is an outdated analog technology. The digital version of anything has an exponentially larger impact than the analog version ever had. Combine the two and you’ll see that we’re on the verge of a new type of money that is not tied to the whims of men or the government.

Blockchain and the widespread adoption of smartphones have paved the way.

What if we had a new type of money, one that is digitally native and whose supply flow is not regulated by the government? This is a radical proposal that many people would reject.

As a result, humanity is preparing for the digital economy, which is why the prices of Bitcoin, Ethereum, and other cryptocurrencies have skyrocketed in recent years, and now major corporations are investing in cryptocurrencies to prepare for the future. This technology’s door has already been opened.

Paper money was originally employed in China over 1000 years ago, and it was met with confusion and widespread condemnation. When large coin-based transactions became impractical, traders devised a system in which pieces of paper were inscribed with writing indicating their value. Transactions were concluded by passing over the paper note, and then the parties went to warehouses to exchange coins.

The early banks were warehouses that kept vast quantities of heavy coinage. The government outlawed the paper as its popularity grew, and then issued its notes as legal tender and the world’s first real national paper money was born.

Surprisingly, China has suddenly banned cryptocurrency, a thousand years after the initial paper notes were outlawed. It was not the government that invented crypto in the first place.

Could history repeat itself, with China producing a regulated cryptocurrency as it did a millennium ago? Words like Bitcoin, Ethereum, Dogecoin, and Alt-Coins generate frenzied reactions.

People appear to be either fervently hopeful about Bitcoin or strongly dubious about it. Although Bitcoin is fraught with controversy, most crypto critics are beginning to change their tune.

In these highly unpredictable years of COVID-19, quantitative easing, stock market explosions, populist governments, negative interest rates, Brexit, and catastrophic inflation forecasts, gold was anticipated to skyrocket, but it has hardly moved at all. It is worth about the same as it was in 2012. Bitcoin, on the other hand, has increased in value from less than $1 in 2012 to more than $30,000 today.

When things are tough, having someone in charge who can help the financial system react to shocks is beneficial. Many strategies are used in monetary policy to assist in managing and stabilizing the economy. These tools would be unavailable if all money was held in private crypto networks, and we would be on our own.

Many central bankers across the world are studying cryptocurrency to see if some of its benefits may be incorporated into central bank digital currencies.

If the world’s central banks take too long to produce widely accepted cryptocurrencies, a growing portion of the population will place their trust in the private currencies devised by creative programmers.

Of course, private cryptocurrencies are fantastic, but it’s also comforting to know that central banks are also leading and innovating money, ensuring that crypto’s reliance on the private sector is not exclusive.

When it comes to the worth of money, the question is: who do you have more faith in: governments, precious metals companies, or computer programmers’ algorithms?

Nigeria is not turning a blind eye to the creation of new technological money in the face of overwhelming evidence.

On September 24, 2021, the Central Bank of Nigeria (CBN) released the official website for its digital money, the e-Naira.

The digital currency was created as an alternative to more widely used currencies such as Bitcoins and cryptocurrencies in Nigeria.

The eNaira is supposed to have an app, but it’s not available right now. When opposed to cash payments, the e-Naira is meant to function as both a means of exchange and a store of value, enabling better payment prospects in retail transactions.

It features a one-of-a-kind operational structure that is both unique and unlike any other kind of central bank money.

As a legal tender, the digital currency has enormous possibilities, including the ability to boost the value of the Naira and raise government revenue due to the ease with which transactions may be completed, particularly across borders.

For the management of the e-Naira, the government must devise a well-thought-out structure to ensure that risks are effectively managed to safeguard the interest of the different stakeholders – individuals, businesses, government organisations, and financial institutions.

Most importantly, a nationwide awareness campaign programme is necessary to educate the users on protecting their data as well as the various channels available for them to report loss of device or any compromise of the eNaira speed wallet.

Fom Gyem writes from Wuye District, Abuja
Gyemfom111@gmail.com

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TECHDIGEST – Facebook has launched a long-awaited pilot of its digital currency wallet Novi in the US, but has chosen to use the Paxos Dollar stablecoin after its own cryptocurrency Diem failed to get backing from regulators.

In a blog post on Tuesday, David Marcus, head of Facebook’s Novi wallet, announced that the company had started the pilot in parts of the US, as well as Guatemala.

Users could download the app on iPhones or Android and register with a government-issued ID, said Marcus, adding that transferring money between wallets would be free. Coinbase, the US cryptocurrency exchange, is providing custody services for Novi.

Andreessen Horowitz, the venture capital firm, is an investor in Coinbase, and Marc Andreessen, its co-founder, sits on Facebook’s board.

The decision by Facebook to use an existing stablecoin rather than Diem, which Novi was originally designed to hold, reflects the difficulties in getting the latter Facebook-initiated project off the ground.

The sector as a whole has faced questions over consumer protection, money laundering and monetary stability. But regulators have expressed particular concerns over the scandal-hit social media giant operating its own currency since it announced the initiative in 2019, alongside a group of backers that include tech businesses and non-profit organisations.

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TECHDIGEST – The Central Bank of Nigeria has explained the economic implications and importance of a centralised and regulated digital currency in Nigeria.

The apex bank had earlier revealed that it would be launching e-naira, a digital equivalent of the naira in October, in line with global trends.

According to Director, Information and Technology, CBN, Rakitya Muhammed, the introduction of the e-naira can catalyse Nigeria’s digital economy, boost cross border trade and enable better macroeconomic policy formulation.

Muhammed spoke virtually at the Third Quarter Industry Forum of the Committee of E-business Industry Heads held in Abuja on Wednesday.

She spoke on the theme, “Digital Currency and the Prospects of Central Bank Digital Currency in Nigeria”.

She said, “If people adopt more of the usage of the e-naira, then we will be able to have more data to formulate better macroeconomic policies.

“And when countries come on board and create their own digital currencies then we will be able to have faster exchange of currencies and therefore we might be able to boost cross border trade at a much lower cost.

“Of course payment efficiency, even though we know that Nigeria has one of the best payment systems in the world, we will still be able to improve on that.

“We believe that the e-naira will be a catalyst for digital economy because the people who are outside the formal banking sector will be integrated.”

Speaking on the e-naira design, Muhammed disclosed that the design would soon be revealed as the apex bank had concluded its development.

The e-naira, she noted, will be a legal tender like the fiat naira, it will not replace but complement the naira and anonymity of transactions is guaranteed.

“In terms of the e-naira design, it will be a legal tender just like cash which is one of the fundamental difference between it and the cryptocurrency.

“One, e-naira will be equal to one fiat naira, and we adopted a two-tier retail model that would be a lot less disruption into the financial system.

“Our banks, payment service providers and Fintech are all going to be onboard and we are going to key to the infrastructure they have already and incorporate the new system.

“It is not meant to replace the cash we have, but only to supplement,” the director noted.

On his part, the Chairman of to the CeBIH, Adeyemi Atanda lauded the CBN’S e-naira initiative, stating that the e-naira will facilitate faster and cheaper payment transactions and drive financial inclusion.

He assured Nigerians that the CBN and banking sector are well equipped to manage fraud and other cyber security challenges that can arise from the adoption of the e-naira.

He said, “We have been very innovate in trying to guide against fraud as much as possible.

“All of those gains we have learnt in digital banking for managing fraud, things like second factor or multi factor authentication, encryption, all of those things will still apply in this case.

“On top of that, the limit is there; and, public enlightenment will also need to go.”

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TECHDIGEST – In June 2021, the Central Bank of Nigeria (CBN) announced plans to launch a digital currency dubbed the ‘e-Naira’ by October 2021, joining 81 countries strongly considering digital currencies.

The CBN’s decision followed two years of contemplation on digital currency technology. Additionally, the CBN’s intention to achieve 80% financial inclusion by the end of 2021 is another motivation to launch digital money.

While there is much information about this digital currency which is soon to be launched, below are six things you should know about the nature of this innovation:

It is purely digital.

The e-Naira would be a Central Bank Digital Currency (CBDC) which means that while it is regulated by the CBN, it is a token that would only exist in digital and electronic form.

It is universally transferable.

The CBDC would be eligible for local and international transfers with little to no time lag and cheaper transaction fees than physical currencies. Also, it would allow you to transfer existing funds in your bank to your digital currency account.

It has a myriad of economic advantages

With the e-Naira, Nigerians can engage in easier cross-border trade, as well as enjoy a cheaper and faster inflow of remittances. Also, a digital currency would provide more financial opportunities for Nigerians as they would be able to create new business opportunities and financial products and services.

According to the CBN, another perk of the e-Naira is a reduction in the cost of operations and cash management. It would also leave a clearer footprint of digital transactions, making it easier for financial institutions to track transactions.

Financial Institutions would still be relevant

The digital currency would be implemented through a two-tiered model which would enable a structure that leaves room for public-private partnership. Just like the physical currency, the CBN will design the e-Naira but disseminate it through regulated financial institutions, which would then provide digital cash to individuals and businesses.

It’s not a Cryptocurrency

While all cryptocurrencies are digital currencies, it is important to note that not all digital currencies are cryptocurrencies. The e-Naira would be regulated by the Central Bank of Nigeria, but cryptocurrencies are not regulated by any government.

Implementation is on track

A recent development in the process of implementing digital currency is the selection of a technical fintech partner, Bitts Inc. After a thorough selection process, as prescribed by the Nigeria Public Procurement Act, Bitts Inc. emerged as a partner to the CBN for this innovative project.

Bitts Inc. prioritises the creation of payment systems that ensures an increase in social inclusion, financial inclusion and overall sustainable economic growth; the excellence in their operation methods has earned them acknowledgment from the Bretton Woods Institutions – IMF/World Bank. This is one of the reasons the CBN enlisted them for this crucial exercise.

Also, the company was the first fintech to digitize a national currency on a blockchain by creating a synthetic CBDC with the support of the Governor, Central Bank of Barbados and the country’s Minister of Finance.

As Nigeria counts down to her 61st Independence Day celebration, citizens can look forward to the start of a digital era where the CBN prioritises making financial operations more citizen-centric.

According to the Geo-economics Centre, the Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia, and Gernada are five countries that have fully launched digital currencies; if things go according to plan, Nigeria will be amongst them.

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TECH DIGEST – The CBN and its stakeholders outlined its digital currency initiative via a private webinar held today, Thursday.

The Director IT department, Rakiya Mohammed, at the end of the meeting explained that the bank had been conducting research in regards to the apex bank’s digital currencies since 2017 and may conduct a proof of concept before the end of the year.

TechDigest previously reported that the central bank during the 306th Banker’s Committee meeting announced that it was working on the digital currency.

The CBN Director-Information Technology Department, Rakiyat Mohammed, disclosed this during a press briefing on the Bankers’ Committee meeting on Thursday, June 10.

Mohammed said: “As I said before the end of the year, the Central Bank will be making special announcement and possibly launching a pilot scheme in order to be able to be able to provide this kind of currency to its populace.”

She explained that about 80 per cent of central banks in the world were exploring the possibility of issuing central bank digital currency and Nigeria could not be left behind.

According to her, the CBN had been been exploring technology and had made tremendous progress for over two years now.

She said: “We have in two forms in Nigeria as of now, there are the notes and there are the coins. So the Central Bank currency is to be the third form of money which means just as we have electronic money, digital money is not new in Nigeria.

“Just as we are about the third or fifth in the whole world as far as advancement in the use of digital money is concerned.

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TECH DIGEST – The Central Bank of Nigeria (CBN) has disclosed plan to launch a digital currency before the end of this year.

The Director, Information Technology, CBN, Rakiya Mohammed, revealed this on Thursday, during a vitual media briefing at the end of a Bankers Committee meeting held that also held virtual.

“The digital currency would be accessible to all Nigerians. Just like everybody has access to cash, everybody will have access to the central bank’s digital currency. Let me state categorically that cryptocurrency such as Bitcoin and the rest of them are not under the control of the central bank; they are purely private decisions that individuals make.

“We have spent over two years studying this concept of central bank’s digital currency and we have identified the risks. And it is one of the reasons why I said we are setting up a central governance structure that would involve all industry stakeholders to access all the risks as we continue on this journey.

“Very soon we would make an announcement on the date for the launch and by the end of the year we should have the digital currency,” the central bank director added.

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TECH DIGEST – On February 5, this year, the CBN posted a circular that stated, “dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.” Institutions were told to “identify persons and/or entities” transacting with cryptocurrency or operating crypto exchanges. The CBN clarified this statement to say trading in cryptocurrency is not banned but CBN wants to “prohibit transactions on cryptocurrencies in the banking sector.” In effect, a ban.

Nigerians responded to this directive from the CBN by simply moving to apps that allow Peer-to-Peer cryptocurrency transactions such as the cryptocurrency trading firm, Binance.

Binance has specifically targeted the Nigerian market in the wake of the CBN ban on cryptocurrencies by creating an NGN FIAT/NGN pair. This allows Nigerians to buy and sell Naira/USD by simply buying cryptocurrencies on the Binance platform and converting to Naira/USD.

I looked at the Naira to the USD exchange rate; it was N410 on the CBN website but N495 on the currency trading website, AbokiFX. According to CBN, if I receive 1$ via a Nigerian bank, I also get N5 addition, from the receiving bank, thus, the CBN is indirectly matching the AbokiFX rate to remove the disparity.

This N5 promotion policy still falls short. I can receive USD inflow from abroad, but if I wanted to import rice, I cannot approach my bank to buy 1$ at N412 which is the Importers-Exporters rate. Why? Because CBN has rice among the items that are banned from accessing the CBN FX system. Thus to import rice, I have to go to “AbokiFX” and get $1 at 495. This is how inflation is imported into Nigeria.

The CBN understands this, that why it tries to keep the Naira/USD exchange rate as low as possible so that the pass-through effect of a weak naira does not make local prices rise. The problem is this, if demand for USD exceeds supply, the exchange rate of the Naira with the Dollar will favour the Dollar and see the Naira weakening. The solution to a “strong” Naira is not to artificially reduce the demand for CBN dollars but to increase the inflow of USD to Nigeria.

Nigeria gets her forex from many sources including:

• Exports
• Foreign Direct Investment/Foreign
•  Portfolio Investment (FDI/FPI)
  Loans
• Remittances

Let us talk about remittances

On November 30, 2020, the CBN said that beneficiaries of diaspora remittances through International Money Transfer Operators (IMTOs) would thenceforth, receive such inflows in foreign currency (US Dollars) through the designated bank of their choice. The CBN can extend this directive to include Fiat Stabilized Stablecoins (Stablecoins).

A stablecoin is a type of digital currency designed to maintain a stable value by being pegged to another asset, like a FIAT currency or another cryptocurrency. So, a stable digital currency like the USDT or BUSD is essentially backed 1:1 by USD. A stablecoin can be traded and exchanged for FIAT Naira, via an exchange. So, my foreign partners can debit their bank account and buy $1000 worth of USDT, a stablecoin, and transfer to me. I simply sell that BUSD for Naira at my price point, at zero transaction cost. Again, zero transaction cost.

Cost is a key factor here. The Brooking Institute says, “The fees paid to remittance service providers to send money to Africa average nearly 9 percent— the highest rate in the world and three times the Sustainable Development Goal target for remittance costs (3 percent).”

Currently, the CBN and in essence, Nigeria, is losing out as more and more of these remittance transactions happen on private exchanges like Binance, which means less USD is flowing to the CBN Import-Export Window. The Binance exchange trading the BTC/NGN pairs is doing an average of N1billion a day. The CBN is essentially competing with these Peer-to-Peer exchanges and the deciding factor for the holder is who can offer a higher rate for USD. If the CBN does not recognize and address this trend, it will continue to see a reduction in remittances.

The next evolution of this is for the CBN to encourage and leverage its network of local banks and the FINTECH community in Nigeria to create a blockchain-enabled Naira stablecoin to enable faster and cheaper remittances and inter Nigeria trade.

Thus, instead of my partners buying BUSD issued by Binance, they can buy, for example, NIGCOIN, a stablecoin issued by an Industry group of Nigerian banks who fund it by creating a separate fund of USD deposits, Thus, if NIGCOIN fund size is $1 billion, bank A can deposit $100 million to fund its own 10% of the currency, and so forth.

Extend this to private sector FPI investors as well. This will mean that private individuals and corporates (e.g. MTN or Dangote Cement) can invest in that NIGCOIN Fund as well. The CBN can allow the Nigerian banks to fund the 45 items banned from CBN fx-trades via the NIGCOIN, thus the bank will compete for USD deposits from tourists and even Nigerians. This way the CBN does not need to collateralize her foreign reserves to back the NIGCOIN.

This NIGCOIN can be a natural stepping stone towards an ECOWAS currency as other smaller West African nations will hold NIGCOIN because of its USD peg which counters inflation.

The CBN can then reap the benefits of increased remittances into Nigeria, by widening its product mix without the volatility of cryptocurrencies, which of course, increases the business, revenues, and taxes that will flow from the banks.

The Nigerian banks, via the NIGCOIN, will be able to attract FPI to Nigeria like Eurobonds by simply marketing the NIGCOIN and via mining and burning, maintaining that peg to that basket.

This, I believe, is a good way for the CBN to start this inevitable journey into the blockchain ecosystem. JPMorgan Chase has introduced JPM COIN, a stablecoin backed by its reserves. Tunisia has its eDinar, Senegal has an eCFA, Dubai has the EmCash. Nigeria must ensure she remains in play.

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