eNaira: Another Crested Feather In CBN’s Transformative Cap

The Central Bank of Nigeria (CBN), under the able leadership of Mr Godwin Emefiele has proudly added another feather to its transformative cap with the successful implementation of the Africa’s First Central Bank Digital Currency (CBDC), tagged the “eNaira”.

Formally launched by President Muhammadu Buhari at the State House, Aso Villa on Monday 25 October 2021, the eNaira was meant to complement the existing currency notes and circulate simultaneously as means of exchange and store of value

Indeed, the eNaira has transformed the apex bank from traditional regulator to a smart regulator.

The implementation of the eNaira has put Nigeria in the global spotlight as one of the pioneers to deploy a CBDC into live production.

This has continued to attract the interest of global stakeholders such as the IMF, World Bank, other Central Banks, and the CBDC community.

CBN Governor, Mr Godwin Emefiele disclosed last year during the eNaira anniversary celebration that some successes have been made since the launch of the digital currency.

Emefiele said, over 700,000 eNaira transactions worth N8billion have been recorded since the launch of the eNaira.

He said, “Since its launch, the eNaira has offered Nigerians endless possibilities in using financial services thus, living up to the chosen slogan, ‘Same Naira, More Possibilities’ as well as achieving some set out objectives.

“Specifically, there has been overwhelming interest and encouraging response from Nigerians and other parties across the world as indicated by the following milestones:

“33 banks are fully integrated and live on the platform. N3.00 billion has been successfully minted by the Bank. N2.10 billion has been issued to financial institutions.

“About 1.0 million (919,000) customers have been onboarded.

Over 3,305 merchants have successfully registered on the eNaira platform across the country including Shoprite, Sahad Stores, A.A. Rano fuelling stations, Fraser Suites, and November Cubes, among others.

“Over 700,000 transactions amounting to about N8.00 billion have been recorded on the platform

“Over 2.5 million daily visits to the eNaira website.”

Emefiele said the eNaira sought to leverage the huge opportunity of mobile telecommunications as a distribution channel for offering digital financial services to the underserved and unbanked population.

“It is the Bank’s hope that the eNaira will drive the digital economy agenda and foster a more prosperous Nigeria,” he said.

Emefiele said last year that since its inauguration, the eNaira had reached 840,000 downloads, with about 270,000 active wallets comprising more than 252,000 consumer wallets and 17,000 merchant wallets.

According to him, the digital currency would enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payments ecosystem and improve availability and usability of central bank money.

“The eNaira will also facilitate diaspora remittances, reduce the cost of processing cash, and also reduce cost and improve efficiency of cross-border payment.

“It is unlike the offline payments channels like agent networks, USSD, wearables, cards and near field communication technology.

“The eNaira would give access to financial services to underserved and unbanked segments of the population,” he said.

He said that innovative products and services built on the eNaira would enhance Nigerians’ participation in the digital economy and promote further development of a burgeoning Fintech ecosystem.

“To achieve these set out objectives, the project adopted a phased- approach with the first phase focusing on banked users, while the policy objective of the second phase borders around financial inclusion.

“In addition, the eNaira platform possesses an innovation layer for products and services to be built with the aim of enhancing Nigerians’ participation in the digital economy,” he said.

Emefiele said, the second phase of the project has begun and is intended to drive financial inclusion by onboarding unbanked and underserved users leveraging offline channels.

He said that the CBN was now ready to accommodate unbanked Nigerians in the eNaira platform

“Greater success is envisioned for the project with phase two expected to deliver more gains with a target of about eight million active users based on estimations using the diffusion of innovation model.

“When we launched the eNaira, we promised to increase the level of financial inclusion in the Country because just like the Naira, the eNaira is expected to be accessible to all Nigerians .

“It will provide more possibilities to bring in the unbanked into the digital economy.

” I am pleased to inform you that by next week, Nigerians, both banked and unbanked, will be able to open an eNaira wallet and conduct transactions by simply dialling *997 from their phones,” he said.

CBN’s Deputy Governor, Economic Policy, Mr kingsley Obiora said, the use of physical cash is gradually getting out of fashion across the globe due to the growth of digital currencies.

“In south Korea, 77 per cent no longer use cash to do payment, while in the Philippines it is 30 per cent.

“In Nigeria, we are also seeing the same decline in the use of cash, the minting of currencies in the CBN has been reducing in the last couple of years.

“So alongside this reduction in the use of cash has also been an explosion in e-business and we have seen the value of e-business grow from 393 billion dollars in 2014 to about 2.4 trillion dollars now.

“If you look at this movement, you will realise that the central banks in the world are responding to yearnings of citizens.

“That is why 96 per cent of central banks in the world are either working on digital currencies or they have done so already,” he said.

Speaking, the Group head, AFF, Daniel Awe, said that the CBN had transformed from traditional regulator to a smart regulator.

Awe said that the Hackathon was a platform that brings entrepreneurs, coders and product managers together to solve problems and build new business model.

“All over the world, there has been disagreement between innovators and regulators.

“This is because regulators usually look at impact on financial stability, impact of those innovators on consumers as well as the risk, while the innovators look at the opportunity in their ideas.

“However, this CBN is different as it has over the years partnered with innovators that will create jobs and bring value,” he said.

On his part, Buhari, said Africa’s first central bank-backed digital currency would help boost remittances, foster cross-border trade, and help his government make welfare payments more easily.

With financial inclusion at the heart of the eNaira goals, President Buhari also said that he believed the CBDC would increase GDP in the country by $29 billion over the next 10 years.

Benefits of eNaira

Nigeria is blazing a trail in Africa with the launch of the central bank digital currency, the eNaira. With over 13 million wallets adopted in 18 months and the launch of “Project Anvil 1.0,” a programmable money system for farmers, Nigeria is making significant waves in the CBDC space.

Experts believe that the eNaira could complement the Naira redesign and cashless policy, boost financial inclusion, reduced transaction costs, enhanced transparency, and a boosted digital economy.

Additionally, Nigeria has made history by becoming the first country to use CBDC via USSD with the launch of *997#. As Nigeria continues to drive CBDC adoption, we can anticipate more innovative developments on the horizon.

The eNaira is primed to enhance financial inclusion by providing access to the unbanked and underbanked population, particularly for small businesses and rural communities.

This enables them to participate in digital transactions without setting up bank accounts, which lowers the barriers to accessing financial services. Already, millions of people who previously had no bank accounts have been onboarded, and this number is expected to continue growing.

Another benefit of adopting a CBDC like the eNaira is the significant reduction of transaction costs for businesses and individuals. Transactions can be carried out faster, more securely, and at a lower cost than traditional banking methods.

CBDCs eliminate intermediaries such as banks and payment processors, and the eNaira is expected to facilitate international transactions in the near future, boosting cross-border trade and investments.

Moreover, CBDCs can enhance transparency and reduce the risk of corruption. Digital currency can help eliminate counterfeit and dirty money, adversely affecting the Nigerian economy. Digital currency transactions are recorded in a distributed ledger technology, making it more difficult for fraudsters to commit financial fraud.

Finally, adopting a CBDC like the eNaira can boost Nigeria’s digital economy, providing a space for fintech start-ups to offer services previously only available to traditional banks, ushering in a new era of innovation and entrepreneurship. The eNaira can also catalyze the growth of the e-commerce sector by providing a secure and frictionless means of payment and a platform for innovation.

While the adoption of the eNaira is not without risks, the Central Bank of Nigeria is taking steps to mitigate these risks. The security and privacy of users’ data are top priorities. Implementing and adopting eNaira may take some time, but the CBN is collaborating and partnering with stakeholders to ensure its successful adoption and use.

In conclusion, the eNaira is a game-changer for the Nigerian economy, offering significant benefits, such as promoting financial inclusion, reducing transaction costs, enhancing transparency, and boosting the digital economy. Nigeria is leading the charge in the CBDC revolution, and it’s exciting to see how the country is embracing innovation to move its economy forward.

CBN, Clickatell Partnership on eNaira Clickatell, a CPaaS innovator and Chat Commerce leader, has partnered with the Central Bank of Nigeria (CBN) to deliver fast, simple, and cost effective eNaira banking services to all Nigerians using the USSD channel, eliminating the need for data and available on all handsets.

Clickatell collaborated with the CBN to launch a USSD channel for its eNaira Central Bank Digital Currency (CBDC) as part of the country’s drive to make basic banking accessible to all Nigerians, ultimately driving financial inclusion.

With financial inclusion at the heart of the eNaira goals, President Buhari also said that he believed the CBDC would increase GDP in the country by $29 billion over the next 10 years.

Clickatell Commercial Director, West Africa, Uzo Nwani said, “introducing the USSD short code allows non-banked Nigerians, many of whom do not have smartphones, to access cashless banking services and is a big win for the stated goals of delivering meaningful financial inclusion. Clickatell’s role in making this a reality has been one of the most important achievements of our engagements in Nigeria.”

The new USSD channel allows Nigerians using the *997# short code to create their eNaira wallet. Once this is done, they can easily check balances and transfer funds, as well as safely buy airtime or data for themselves or friends and family. Safeguarding their wallets is also easy on the channel and users can check and update their information, change and reset their pin, or even block the wallet if necessary.

Also speaking, the CBN Deputy Governor, Economic Policy, Dr. Kingsley Obiora said, “the USSD channel is a vital part of our journey towards realizing our financial inclusion vision. We see the eNaira as a leap forward in the evolution of money. Thus, CBN is working with partners who are committed to taking advantage of this new technology for continuous innovation towards delivering exciting new features.”

Unstructured Supplementary Service Data or USSD, is a communications protocol that is supported by 99% of GSM handsets. It remains particularly relevant in developing communities where it is used to provide services at a much lower cost and can be used without requiring access to the user’s SIM card.

Despite the rapid growth of smartphones, the majority of Nigerians are currently using feature phones, making an excellent case for the USSD offering. The CBN is counting on the new channel making rapid inroads towards getting most of the 30% of unbanked Nigerians into the formal banking system.

As part of its efforts, the CBN is working hard to boost awareness and education around the new digital currency and has offered an incentive of 200eNGN airtime for the first 100,000 users to onboard using the eNaira USSD feature.

Looking ahead, Nwani says the Clickatell solution ideally positions the system for new and collaborative additions to help boost the eNaira services.

“Our Chat Flow product provides a robust platform to support rapid innovation. Digital currencies provide measurable customer benefits including lower costs and a simple user experience and adding new innovative features over time will definitely attract more customers. There is no doubt that the CBN has set the benchmark when it comes to financial inclusion in Africa, and we look forward to being part of that journey,” Nwani says.

Award

The Foreign Investment Network (FIN) conferred on the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, with the Euroknowledge Africa Most Innovative Digital Transformation Governor of the Year Award for 2022.

Emefiele received the award at a ceremony held at the Willard Intercontinental Hotel on Thursday, October 13, 2022, on the sidelines of the Annual meetings of the IMF/World Bank Group holding in Washington DC.