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Nigeria’s Digital Currency Gets Mixed Review From The Crypto Ecosystem

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Nigerians have called on the administrator of President Muhammadu Buhari to focus first on managing the dwindling Naira before proceeding to digitalize the country’s currency. 

This came in the wake of the recent launch of Nigeria’s digital currency, eNaira by President Buhari on October 1 at the State House, Abuja.

What is eNaira?

The eNaira is an alternative payment system and store of value for households and businesses to hold and use. To establish the ecosystem, users will need to convert some of their existing bank deposits into eNaira to hold in their wallets.

The eNaira is a Central Bank Digital Currency (CBDC). Although the naira has allowed digital transactions before as you can transfer money or make payments from your phone or laptop via the bank’s app or payment platform as long as you are connected to the internet, or via USSD without the internet, this new development is to ensure there is a fully digital version of the fiat Naira. 

However, the new eNaira is not like other digital (crypto) currencies as it is backed by a country, Nigeria and it is tied to a fiat currency, Naira. The closest comparison to eNaira in the world of cryptocurrency would be the USDT, a stable currency tied to the US Dollar, called Tether. 

This new digital currency, which has taken four years to form, will put Nigeria on the global tracking map of Central Bank Digital Currency (CBDC) as the fifth country to launch a centralized national electronic currency. Nigeria now joins Bahamas, Sweden, Cambodia, South Korea as pioneers of CBDC.

What is the idea of eNaira being tied to the fiat Naira?

This means the eNaira and the fiat Naira will be the same value at all times. Also, that the currency is backed by the government through the Central Bank of Nigeria (CBN) and this will be a comfort as the CBN cannot default on its obligations. 

There are some issues in the case of cryptocurrencies which includes; loss of pin/passcode, theft, misplacement or corruption of device, collapse of exchanges, loss of backup keys amongst others.

For the case of eNaira, the digital currency has two applications; eNaira Speed Wallet and eNaira Merchant Wallet which can be found on both Google and Apple app stores.

What problem will the eNaira solve?

During the launch, President Buhari said the adoption of the eNaira is expected to increase Nigeria’s GDP by $29 billion over the next 10 years. 

Speaking at the unveiling event which had the Vice President, Yemi Osinbajo; governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, and other dignitaries in attendance, the President said:

“We have become the first country in Africa and one of the first in the world to introduce a digital currency to our citizens.”

The apps website also outlines the overall value of the currency to Nigeria’s economy and its functions. 

“eNaira is a Central Bank of Nigeria-issued digital currency that provides a unique form of money denominated in Naira.

“eNaira serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments,” the statement read. 

Nigerians’ Reaction To eNaira’s Launch

Since the launch of the eNaira, Nigerians, mostly on social media have expressed skepticism and criticism over the currency’s sustainability by the Federal Government as they hope the innovation will have a positive ripple effect on the Naira. Here are some of the things people had to say;

OluwaFemi J. Olagunju: “Under this present Central Bank governor, our economy has become nosedive than ever before, and the naira is at its weakest. Instead, the Central Bank of Nigeria has continually looked for ways to exploit Nigerians through silly numerous bank charges. Instead of launching the e naira, the failed Central Bank governor should be interested in at least returning the value of naira to what he met when he got into office. “The Central Bank governor witch haunted those who took part in the EndSARS protest by placing embargoes on their accounts. Why has he not done the same to bandits or killer herdsmen?”

Garba Talasse: “We are becoming digital Nigeria. Thank you CBN, thank you PMB for making such a reality.”

Ev Ans: “Since the money is not going to appreciate or depreciate then I don’t see the essence of this eNaira cause it’s going to be the same with a bank mobile app no difference anyway good work.”

Abdallah Mohammed: “At least, if it will reduce bank exploitation, it’s a welcome idea but I don’t see any difference with our money in bank accounts.”

In Conclusion…

The eNaira is surely considered a development as it will help to make payments faster, get access to direct exchanges and also reduce the CBN budget on printing fiat Naira amongst others.

But will it really solve the issue of financial inclusion? The eNaira is expected to be accessible by all Nigerians as everyone can download the app on their phones and register with their BVN. Is this not to say that the eNaira will still be for the intellectuals and the financially-inclusive as before? 

To get on board with eNaira, you need a smartphone, NIN and BVN. Majority of the people using smartphones are already financially included. They are the ones who transact daily via banking apps and USSD. What then happens to those who do not have a smartphone? Those who cannot operate a smartphone? Those who do not have NIN or BVN?

These and more are the questions this new development has been greeted with by Nigerians in the crypto ecosystem.

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