• E-Naira: and all you need to know about it.

The Central Bank of Nigeria (CBN) has announced that it will launch its eNaira on the 1st of October 2021.

What exactly is e-Naira?

The e-Naira is a legal tender that will be available in digital formats. The eNaira will have the same exchange value as the Naira, and it will be accepted for payments of goods and services once implemented.

The e-Naira should not be mistaken for cryptocurrencies because, unlike cryptocurrencies, the e-Naira will fall under the same monetary policy control administered by the CBN. It is also primarily transactional, which means it does not appreciate or attract interest like Cryptocurrencies.

How would it work?

The e-Naira would operate like the money you see when you check your bank accounts online. According to Rakiya Mohammed, the director, information and technology, in CBN, users will have to download the wallet and validate their accounts using either telephone numbers, BVN or NIN. Once that is done, users will be able to send money to others using P2P transactions through their wallets to other wallets

What are the Potential Benefits of the e-Naira?

The CBN believes that the e-Naira will reduce cash handling by 5-7% and this will further drive the financial inclusion goal of the CBN, by integrating people that are outside the formal banking sector.

e- Naira is also promoted for formal cross-border payments for efficiency, convenience and affordability.

Okay, are there any risks?

Privacy may also become a huge issue, depending on how the digital currency is designed. There is a danger that the CBN may end up creating a central database. Yeah, you guessed right; the CBN might want to balance privacy issues with the need to contain money laundering and terrorist financing.

What does this mean for you?

There are risks and benefits attached to the implementation of e-Naira; it can make cross-border transactions less complicated, and you can receive Forex with reduced transaction costs. Some concerns include misuse of data by the central bank.

It doesn’t matter which end of the divide you are; the world of payments continues to evolve rapidly. Active involvement of central banks is inevitable, but it remains to be seen how much social value the e-Naira will add.