OCTOBER 31, 2021

The launch of eNaira on October 25, should be seen for what it is: A bell ringer for deepening the digital currency bourse by Central Bank of Nigeria Governor, Godwin Emefiele. It was also fitting that President Muhammadu Buhari personally launched the new Central Bank Digital Currency (CBDC). It shows seriousness and commitment of the Nigerian government to growing the nation’s digital economy.

Though a late starter in the digital mobile market and even in broadband deployment, two key elements in electronic financial transactions, Nigeria has in recent years overtaken many countries. Year on year, electronic transactions in the financial markets have continued to nose up. A truly cashless Nigeria is evolving. Under Emefiele as CBN governor, it has been on significant ascendancy. Real proof is in the varnished queues in the deposit sections of commercial banks. The buzzing sounds of over-worked banknote counting machines have faded into history. Why carry bulky naira notes when you can just make the transfer. Why accept payment in naira notes with all its attendant risks when you can do same via POS or electronic transfer. And trust Nigerians, they have long embraced e-transactions.

By fourth quarter of 2020 (Q4 2020), the National Bureau of Statistics (NBS) put total volume of e-transactions at 3,464,811,083 with a value of N356.47 trillion recorded on electronic payment channels. Leading the log is online transfers with volume of transactions at over 2.23 billion deals valued at N120.27 trillion. Cash is no longer king. Even cheques are fast losing their appeal.

Welcome to electronic transaction age when trillions of naira exchange hands without notice. Nigerians are already e-transaction savvy. This makes the CBN eNaira both exciting and intriguing. Before eNaira, some Nigerians have been immersed in the cryptocurrency frenzy. But cryptos have their drawbacks: surreal and not liable to regulation hence risky as transaction instrument; subject to devious manipulation by crooks; has been targeted by terrorists and their financiers to move money across borders and make purchases for their mortal tools of destruction. The list is long. Not so, this eNaira. It is just another form of the physical naira but in digital form. It’s not in competition with the paper naira. They are both at parity hence no fear of arbitrage.

Much more, eNaira is seamless with paper naira. And inter-bank transfers are easy. It is a case of ‘what you see is what you get’. Months ahead of the launch, CBN has held multi-stakeholder consultations to announce the coming of the eNaira which history goes back to 2017. The global digital space is growing. Both the World Bank and the International Monetary Fund (IMF) have predicted quantum growth in the digital economy space in the coming decades. With cryptocurrency riding the crest of the digital economy market with ferocious audacity, even with its high risk, reserve banks around the world have been researching on the appropriate steps to take just to make as much as a toehold in the evolving digital economy. Nigeria’s central bank started its research on the best possible concept of digital currency to adopt. The result of that journey which commenced in 2017 is what is called eNaira today.

Emefiele said the objective of the research was to establish a compelling case for the adoption of a digital currency in Nigeria to enable a more prosperous and inclusive economy for all Nigerians.

President Buhari who holds the historical record of being the first African leader to launch a central bank digital currency projects that in the next decade, the CBDC has the capacity to plough not less than $29 billion into the nation’s GDP. This is possible especially with Nigeria ramping up her broadband penetration and deployment. Nigeria currently has an ambitious broadband plan (2020 -2030) which seeks to populate the entire nation with broadband infrastructure, targeting 90 percent of the population and 70 percent of the landmass. Add to this, the growing mobile density. By September 2021, there were 190,520,914 active GSM lines with over 229 million connected lines. And when you consider that most digital transactions in the financial space are done via handheld devices, then you can imagine what lies ahead for the digital currency market: a rosy future! Yet, the benefits of eNaira is beyond its contribution to GDP.

The CBN breaks down the benefits to Nigeria and Nigerians to include: Supporting a resilient payment system ecosystem; encouraging rapid financial inclusion; reducing the cost of processing cash; enabling direct and transparent welfare intervention to citizens; increasing revenue and tax collection; facilitating Diaspora remittances; reducing the cost of financial transactions, and improving the efficiency of payments. This list is not exhaustive.

Credit to CBN for whetting the appetite of Nigerians before launching eNaira. The pre-launch public enlightenment, consultations with focus groups including the media helped to stimulate public interest and the result is self-evident. Just hours after the eNaira platform went live, there was overwhelming interest and response from Nigerians both at home and in the Diaspora. A good 2.5 million daily visits to the website was recorded.

The pre-launch interest generated resulted in the following milestones: 33 banks fully integrated and live on the platform; N500 million successfully minted by CBN; N200 million issued to financial institutions; over 2,000 customers onboarded; and over 120 merchants successfully registered on the platform.

This interest already generated among parties from outside the country is something that should make minders of the nation’s economy happy. Nigeria has a healthy Diaspora remittance value. In 2020, Nigeria ranked among the top 10 countries in the world with highest Diaspora remittances, sharing the same circuit with India, China, Mexico, Germany, France among others. The National Bureau of Statistics (NBS) placed Diaspora remittances in 2019 at $23.4 billion. In 2020, it dropped to $16.9 billion (a global trend due to Covid-19 pandemic). The eNaira is expected to buoy management and collection of Diaspora remittances and this could help loosen a wee bit the tight freeze on forex.

More than any other CBN Governor, Emefiele has been most creative and courageous in trying to defend the naira and grow the federal reserve. CBN under Emefiele has undertaken more interventions than at any other era to grow the economy by encouraging local production. And he’s doing that at the most critical time of the nation’s economic life when crude oil price dipped to its lowest. He has taken on import merchants who milk the nation’s forex reserve to import anything and everything including balloons and biscuits, toothpicks and nail cutters. He has dared the dollar wanglers and forex grifters. Emefiele is doing today what ought to have been done many years back when forex was in abundance. He is rallying to promote local production with scarce forex whereas his predecessors wasted much forex promoting consumption. If there is ever any award for being the Most Innovative Central Banker, Emefiele deserves such diadem.

He wants Nigeria to transit from a consumption economy to a production economy. He wants an end to importation of basic goods and products which could easily be produced locally. He wants Nigerians to rethink their lavish lifestyle that places premium on exotic goods to the hurt and detriment of the nation’s economy.

• First published in Sunday Sun