On September 14, 2022, when Africa-focused fintech firm, Flutterwave, announced it has added Nigeria’s eNaira as a payment option for merchants, tech analysts promptly reckoned it was a timely move to help boost adoption of the nation’s digital currency.
That reaction was understandable considering that Nigeria, as the first African nation to launch a digital currency, is targeting 8 million users for the app launched on October 25, 2021.
With its pay-word “Same Naira, More Possibilities” the eNaira, the digital currency issued and regulated by the Central Bank of Nigeria, rides on a functionality that delivers speedy, safe and simple trading and transactional opportunities to customers and end-users:
It is exchanged peer to peer, with universal – applicability that shows that anybody can hold it even as no interest yields are in -built interest.
One outstanding characteristic of the CBDC is the fact that funding of the eNaira wallet can be done through an account holders regular bank app via cash through an eNaira verification agent, over the counter at designated bank branch or a SANEF agent.
Although adoption of the digital currency has been slow among banks anxious that the app could compete with their online platforms to reduce fee revenues, it stands to the credit of the Central Bank of Nigeria (CBN) that its introduction would take the nation’s financial inclusion mandate a notch higher.
In addition to its inclusion into the payment platform, Flutterwave also pointed out that over 1 million merchants now accept eNaira payments from their customers.
“We… are confident that this number will grow further as we continue to innovate and expand,” The tech firm said in a statement.
Nigeria is hoping to expand usage of its eNaira digital currency by attracting users without bank accounts after a first phase adoption saw 850,000 downloads by bank customers.
In doing so, Nigerian government expects to stabilise its weakening currency, curb rising inflation and boost growth after economic disruption from the COVID-19 pandemic hobbled businesses across the country between 2020 and 2021.
The eNaira Hackathon comes in as an initiative that creates opportunity for experts with diverse tech expertise to collaborate to drive sustained innovation geared towards making the use of CBDC a digital currency in the nation’s financial services industry as gateway to its digital economy, largely driven by the private sector.
Since October 25, 2021, when President Muhammadu Buhari unveiled the eNaira, the Godwin Emefiele-led CBN has not relented in investing towards improving the process of deepening its adoption in the Nigeria’s payment system to ensure it becomes a reference point in Africa and across the world.
Barely one month to its first anniversary, the August 18, 2022 e-Naira Hackathon held in conjunction with Africa Fintech Foundry, was indeed another forward leap by the apex bank towards a seamless implementation of initiative and ensuring all Nigerians receive the full benefits of the CBN’s digital currency.
Head of AFF, Daniel Awe, said in an interview with newsmen ahead of the event held at Eagle Square, Abuja, that top 10 startups, innovators, and entrepreneurs, would be part of the over 5,000 startups that registered for the eNaira Hackathon.
He said that there was a need however to increase the adoption of eNaira across the country, due to its capacity to enhance financial inclusion, support the digital economy and improve economic activities.
With several agitated minds still questioning its relevance amidst major advances by banks and fintechs in the nation’s payment space, many stakeholders said they would prefer as it were, the legalisation of cryptocurrency, widely traded across the world.
Talking of it’s benefits to the business community, some have contended that the eNaira would serve both as a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments.
But according to the apex bank, the scheme provides a secure and cheaper diaspora remittance option and increases the speed of such transactions to enhance traceability that guards against use for fraudulent activities.
In the implementation of Federal Government’s conditional cash transfer initiative to vulnerable households, the eNaira could enable effective, equitable, and faster distribution of cash assistance to households and communities included in the programme, thereby minimising the traditional human interventions that often lead to undercutting of beneficiaries of such initiatives .
Perhaps one area, this product appears to demonstrate better functionality is the realm of financial inclusion as it makes financial services available to people or communities lacking adequate banking opportunity, particularly at the grassroots and among lowly educated human clusters.
With regard to trade facilitation, experts contend that eNaira has the potential to increase Local and International Trade by making transactions cheap, safe, quick, and better, in addition to its stronger security as it cannot be forged or counterfeited because of its unique identity and security structure.
In an environment with manifest corruption tendencies, a nationwide adoption of the eNaira would aid better revenue collection by reducing cash handling costs.
But in the opinion of several stakeholders, the apex bank needs commendation for a job well done so far, even though some believe a lot still needs to be done.
According to Mr Frank Onyebu, chairman, Manufacturers Association of Nigeria (MAN), Apapa branch, the CBDC has gained some traction, but it hasn’t gained as widespread acceptance as the government would want us to believe. He said that the reason it hasn’t made the expected impact is possibly because the selling point doesn’t resonate with the populace. “A lot of people simply don’t understand the difference between this and similar platforms, especially the cryptocurrencies. Then there is also the issue of trust, with the activities of fraudsters increasing by the day.
It would take much more ingenious advertisement and aggressive marketing to get people to realize the benefits of the digital currency and thus embrace it”.
“The government needs to convince Nigerians that their fears are unfounded. Some sort of incentives have to be provided. Massive campaigns need to be mounted through various media with the aim of convincing businesses to buy into the initiative. More so, government agencies and parastatals have to fully embrace e-Naira. Gradually businesses would have to embrace the initiative. Ultimately certain government transactions would be done exclusively using the digital currency.
I dare say that once Nigerians see the system working seamlessly with little or no risks the government would have a hard time controlling the influx of people into the digital space.”
Financial inclusion has been minimal
The reasons for this are not far fetched: inadequate trust of and lack of consistency in government policies. The fact of the matter is that the average Nigerian does not sufficiently trust the government to fully embrace policies such as this. Everyone is playing the waiting game, not knowing if the government will reverse itself in no distant future. People are also aware of the risks associated with digital currencies and do not want to be burnt.
Also commenting, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said
“One must commend the CBN for the trail blazing initiative on the digital currency. However, given the prevailing economic conditions, l do not think that the digital currency conversation should be a priority for now. There are more important fiscal and monetary policy issues to worry about now than the investment in CBDC.”
Investors are still grappling with intense inflationary pressures, currency volatility, forex market illiquidity and high interest rates. These are issues that should be much higher on the agenda of fiscal and monetary policy discourse.
Besides, there are growing concerns about cybercrime. Even the advanced economies are still struggling with the challenges of cyber security. I think we should make haste slowly on this matter.” He concluded.
According to Dr Daniel Dickson -Okezie, Chairman, SMEs Group of the Lagos Chamber of Commerce and Industry (LCCI)
The e-naira has not been really impacting. It’s gradually progressing though, it has not been inclusive. It’s more popular among the youths . The awareness is still low. Most Nigerians on the streets and traders who drive the economy don’t even have an idea of the e-naira. Before we talk about it driving financial inclusion, people must have knowledge of it and its fundamentals.
In the middle of August this year, the CBN governor, in a press statement said transaction on the CBDC hit #4billion. He also said the bank had achieved 840, 000 downloads of the Apps. With 270,000 active wallets being used, 250,000 consumer wallets and 17,000 merchant wallets.
This figures are a description of his achievements from the CBDC since it was launched on October 25, 2021. From his outline, looking at the figures, can we now say the initiative has impacted the economy in a population of 200million Nigerians?.
From his figure , we have not got up to 500,000 people operating the wallets and the #4bllion he talked about, a trader can make them in two to three days. So, we can see that it’s still a far cry. A lot of work needs to be done . The primary challenge is awareness, to what extent do people know about the e naira. Some have heard but don’t know how it works.
The CBN needs to expand its information and awareness machinery to enable Nigerians know about its existence , how it works and its benefits.
Another issue is skeptism of Nigerians towards offerings from government, which most people believe don’t work but will always fail. They believe anything that comes from government is suspicious. So that mentality is affecting the impact of the e naira.
The CBN governor also promised total inclusion by bringing on board the unbanked and the underserved users leveraging the off line channels or platforms.
They are yet to deal with the real digital channels -internet. Let it work first before introducing the off line channels.
A lot of people don’t use the internet. The educated needs to be brought on board before talking about the offline platforms or channels.
The CBN needs to improve awareness
People are afraid of the challenge of cybercrime or the data theft. There is fear of the possibility to attack the system. So the CBN has to improve on the system.
A continuous upgrade and improvement of the digital infrastructure will go a long way in ensuring increased confidence on the platform.
The CBN needs to involve the organised private sector for a better awareness the bank needs to involve the sector in addition to the direct interface with the public.
The use of OPS organisations like BMOs, the LCCI and other organisations to extend awareness cannot be over emphasised.
For his part, Obinna Anyanwu, Chairman, Financial Services, the Lagos Chamber of Commerce and Industry (LCCI)
“The digital currency introduced by the Central bank of Nigeria is still work in progress. The rate of adoption is still low. We have other digital channels that people use for transactions like transfers through phones, payments through ATM, debit cards and a large number of people still walk into banks to make transactions
You will have to download the application and create an account, how many Nigerians have that time. People also want to adopt a wait and see attitude. Whereby waiting for testimonial from other users of the currency. A lot of Nigerians are careful these days because most of them have been defrauded. They want to be sure of the safety that is why they are sceptical.
But as time goes on, I think most Nigerians will overcome these challenges and key in.
CBN has to deepen use of the currency
There is not much awareness about the currency through adverts to inform and educate the populace.
It needs to ensure people adopt it and start using it so as to become a way of life for businesses. Safety on its use needs to be put in place.