EXPLAINER: What you need to know about eNaira
President Muhammadu Buhari has said that the adoption of the Central Bank Digital Currency (CBDC) and its underlying technology…
On Monday, President Muhammadu Buhari unveiled eNaira, Nigeria’s digital currency.
At the launch, Buhari said the adoption of the Central Bank Digital Currency (CBDC) and its underlying technology, blockchain, will increase Nigeria’s GDP by $29 billion (about N11.9 tr) over the next 10 years.
The rise of digital currencies is also driving new forms of digital money assets like Blockchain technology, which is driving cryptocurrencies with all the associated risks.
The CBN had warned against the investments in cryptos since they are not bound by any known regulator.
However, the eNaira is not a cryptocurrency and thus cannot be traded like cryptos. The eNaira is the same as the physical currency but in a digital form thus can be used for payments and purchases only.
At the launch, Godwin Emefiele, CBN governor, said Nigerians are already excited about the eNaira as transactions are already taking place.
He also said there are security measures to protect the digital currency.
“Specifically, there will be strict adherence to the anti-money laundering and combating the financing of terrorism (AML/CFT) standards to preserve the integrity and stability of Nigeria’s payment system,” Emefiele said.
With the activation of the eNaira platform on Monday, Nigerians and other residents in Nigeria wishing to transact businesses or make payments using the eNaira can now download the eNaira Speed Wallet App on iOS or Play Store and be able to perform the following:
- Onboard and create their wallet
- Fund their eNaira wallet from their bank accounts
- Transfer eNaira from their wallet to another wallet
- Make payment for purchases at registered merchant locations.
- Prospective users can also approach their banks for support or any of the eNaira accredited vendors.
Your eNaira transaction volume
The apex bank has also set the limit of transactions in the framework. For instance, in the Tier 0 category or phone number without verified National Identity Number (NIN), the daily transaction is limited to N20, 000 with a balance or e-wallet limit set at N120, 000.
For the Tier 1 category with verified NIN, the daily transaction reaches N50, 000 with N300, 000 e-Naira wallet balance. Those in the Tier 2 category can do N200,000 daily and N500,000 e-wallet balance while for Tier 3, they can do N1 million daily transactions and hold N5m via e-wallet.
CBN further said merchants or individuals that have full clearance have no limit as to the e-Naira transaction they can do.
How eNaira differs from physical currency
Unlike the physical currency, the eNaira ledger will not be warehoused in a bank but at CBN. Thus, it is not interest-yielding and doesn’t function as a savings account. It enables the account holder to keep floating cash that he or she can use for basic transactions. The money in the eNaira wallet isn’t also insured thus cyber theft of the money might not be compensated.
Why eNaira?
One key attraction of the eNaira is that you don’t have to be tech-savvy to leverage it. Users can also access it for payments and transactions using the short text codes or USSD. The USSD code hasn’t been promoted yet.
It provides a unified payment system by enabling customers to transfer money from their main account to their e-wallet.
Digital currency enables contactless payment by making payment without any hand-to-hand encounter which is a preventive measure in the wake of the COVID-19 pandemic.
Customers can make in-store payments using their eNaira wallet by scanning Quick Response (QR) codes.
The new digital currency also enables peer-to-peer payment as customers can send money to one another through a linked bank account or transaction.
You can also manage your bank account on the eNaira platform, so you can check your account balance and monitor transactions.
What new guideline says
According to the eNaira guideline released on Monday by the Director, Financial Policy and Regulatory Department, Chibuzo Efobi, for self-enrollment into the eNaira Speed App, one must have Bank Verification Number (BVN) particulars that include an email address.
Ministries, Departments and Agencies (MDAs) are also empowered to receive revenue and make payments in eNaira.
While onboarding, users will have to disclose on the app if they are using it for themselves or for trustees, in which case they will have to disclose further details.
To encourage more people to join the platform, CBN in the latest guideline said all charges shall be free in the next 90 days (three months) from the launch date yesterday. The charges are similar to existing online charges for bank transactions.
Can eNaira raise naira-dollar value?
The eNaira will not necessarily have an impact on the value of the Naira against major currencies like the US Dollar. This is because the currency cannot be traded for profits just like the physical Naira cannot be traded. It can only be used to make payments.
Emefiele said the CBN will continue to refine, fine-tune and upgrade it. Therefore, Nigerians should expect to see additional functionalities in the coming months, including:
– Accessibility and onboarding of customers without BVN and the use of the eNaira on the phone without the internet will further drive financial inclusion, making Nigeria one of the first countries in the world to deploy the CBDC via USSD on phones without relying on internet connectivity.
– Onboarding of revenue collection agencies to increase and simplify collections
– Creation of sector-specific tokens to support the federal government’s social programmes and distribution of targeted welfare schemes in a bid to lift millions out of poverty by 2025.
The bank has also clarified that the eNaira is not an investment platform but a version of the physical currency, as it had held extensive engagements with stakeholders in the banking community, merchants and financial technology (fintech) operators and users.
The apex bank has themed the eNaira as: ‘Same Naira, more possibilities and it can be used by creating an eNaira wallet.
The CBN has also urged Deposit Money Banks (DMBs) to facilitate prompt placement of restrictions on eNaira wallets in the event of a valid report of loss, theft of device or compromise and a hack of a user eNaira wallet.
CBN had launched the eNaira Regulatory Guidelines earlier this month, which empowers customers to report compromises of the eNaira wallet via USSD channels, internet banking platforms, customer care phone lines, and in-branch customer care.
CBN integrates 33 banks, mints N500m for eNaira
The CBN Governor, Godwin Emefiele, said 33 banks have integrated into transacting in the digital currency of which it has minted N500 million for that and has released N200m to the banks.
“The eNaira and Naira will have the same value and will always be exchanged at one naira to one eNaira,” he said.
According to Emefiele, since the eNaira platform went live, there has been overwhelming interest and encouraging response from Nigerians and other parties across the world with over 2.5 million daily visits to the website.
On the milestones achieved with the launch of the digital currency, he said: ‘’33 banks are fully integrated and live on the platform, N500m has been successfully minted by the bank, N200m has been issued to financial institutions, over 2,000 customers have been onboarded and over 120 merchants have successfully registered on the eNaira platform’’.
By Muideen Olaniyi, Chris Agabi & Simon E. Sunday