The website for Nigeria’s eNaira went live on Monday, days ahead of the launch of the pilot for central bank digital currency (CBDC) on 1 October.
“The 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 website states. While these are worthy goals, the question is whether this wording will appeal to mainstream users or whether there’s a need to be more consumer-friendly.
Acting as an effective medium of exchange and improving cross border payment efficiency is a key priority for the Central Bank of Nigeria (CBN). In 2020, Nigeria’s total remittances amounted to $17.2 billion, reported the World Bank. A CBDC may enable swift direct remittance payments between Nigerians living at home and abroad.
In addition to speeding up cross-border payments and making them less expensive, a key motivation for CBDCs is to increase financial inclusion. Currently, 23.7% of the Nigerian population is unbanked. This may be due to high costs of financial services, travel time to branches, lack of identity documents, or poor trust in institutions.
As a digital form of cash, a CBDC would help make cash more accessible and enable the population to participate in Nigeria’s growing e-commerce economy.
Users will be able to download the eNaira application from either Google play store or Apple app store, confirmed the CBN’s governor, Godwin Emefiele.
“They should be able to find their wallets using their bank accounts and conduct transactions such as transfers and purchases at merchant outlets that have boarded to the platform,” he said.
This news comes two weeks after the Central Bank of Nigeria (CBN) shared that it had awarded the contract for its eNaira digital currency to Bitt, a fintech company specializing in CBDC solutions.
Meanwhile, elsewhere in the African continent, the Bank of Ghana is looking to commence a pilot of its e-Cedi in partnership with Germany’s Giesecke+Devrient (G+D) Currency Technology. The potential for using a CBDC for cross border payments is also featured in the latest trial between France and Tunisia.
