THE BENEFITS OF NIGERIA’S E-NAIRA AS A MEDIUM OF EXCHANGE

E-Currency which is an electronic legal tender is today fast becoming more and more popular and acceptable as a medium of exchange just like the conventional coins and banknotes in the transaction of businesses across the world. It is accepted by many countries as legitimate money for buying and selling.

Today, Nigeria has joined the league of Nations using e-currency. The country is indeed one of the leading countries in the world with crypto adoption accounting for about 32% of users. Many people are benefitting from the opportunities that cryptocurrency offers.

The quest for investment opportunities in the face of unemployment and poverty make the youth embrace cryptocurrency even with the ambiguous legal status of digital assets in Nigeria.

But a worrying fact is that Nigeria does not have the proper legal framework that governs cryptocurrency. The Central Bank of Nigeria (CBN), in February 2021, banned the use of bitcoin as well as other digital assets in the country, it directed all financial institutions to stop facilitating crypto transactions and desist from transacting with entities engaging in crypto.

The action of the central Bank is yet to yield positive results. For example, the ban did not stop penetration of crypto in Nigeria as the country is ranked the third nation with higher penetration around the world with currency booming and flourishing.

To sanitize the financial system and provide alternative for players in the digital space, the Central Bank of Nigeria launched the e-Naira in October 2021 with the hope of cutting transaction costs and boost participation in the financial system. The launch of the e-naira is meant to increase Nigeria’s Gross Domestic Product (GDP) by twenty-nine billion dollars in the next ten years.

Like coins or banknotes, the e-Naira is a liability of the CBN, using the same block chain technology as Bitcoin or Ethereum and like them, the e-Naira is stored in digital wallets and can be used for payment transactions.  It can also be transferred digitally and at virtually no cost to anyone in the world with an e-Naira wallet.

Unlike cryptocurrency, the e-Naira features stringent access right controls by the Central Bank and draws its value from the physical naira to which it is pegged at same exchange of one naira to one e-naira.

Since the launch of e-naira, it received about three million daily visits in 2021 with over thirty- three banks integrated on the platform with about two thousand customers on board so far.

The Central Bank of Nigeria says its digital currency, the e-Naira, is expected to lower remittance transfer costs, making it easier for Nigerians in the Diaspora to remit funds to Nigeria by obtaining e-Naira from international money transfer operators and transferring them to recipients in Nigeria by wallet-to-wallet transfers free of charge.

It is also designed to increase financial inclusion and facilitate more direct and effective implementation of social transfers programmes.

Since its launch about three months ago, Nigerians have continued to gradually adopt e-Naira as a fast and reliable means of exchange.

Given the size and complexity of Nigeria’s economy, the e-Naira has drawn substantial interest from the outside world, which necessitated the CBN, the Nigeria Interbank Settlement System and the Deposit Money Banks to begin to simplify the process of bringing in new users and activation of the e-wallet.

This may arise due to mismatch of Bank Verification Number, enrollment records and personal identification of users.

The e-Naira is secure and dependable owing to the fact that it uses cryptographic technologies encrypted with two factors for authentication.

Nigeria is indeed on the right track as is aligning itself with the digital economy of the future.

E-Currency is the way to go if Nigeria must join the league of nations set to advance in the technology hub of the socio-economic transformation of the global economy.

PIAK