The Central Bank of Nigeria, CBN, presided over by Governor Godwin Emefiele, is set to launch Nigeria’s first digital currency called e-naira on October 4th, instead of the earlier scheduled October 1st, being the nation’s Independence Day.
According to Mr. Johnson Chukwu, CEO, Cowry Asset Limited, e-naira is a digital currency; which is basically the same as the country’s legal tender; but not in form of notes or coins, but in a digitalized format.
He said, because e-naira is in virtual format, does not mean it is not acceptable as a means of transaction in the country.
Mr. Chukwu gave this clarity on Arise News TV, on Tuesday, September 28.
He explained that, people with bank accounts can still operate e-naira accounts without their money being reduced. He affirmed that one e-naira is still equivalent to N1 note in Nigeria’s currency; and stated the differences between operating digitalized naira format, and a ‘normal’ bank account since some Nigerians are skeptical with the emergence of this e-naira or e-wallets despite the existing and ‘easy’ ways of carrying out transaction in the country.
“The difference between your e-naira wallet and your bank account is that, one, you can effect transactions instantaneously. You do not need any of your banking instruments like your cheque, your debit card to effect transaction. With your wallet, you can actually make payment to a merchant, you can make transfers to what we call person to person transfer, peer to peer transfer, you can make payment to any other service provider; and then, you can also transfer money back to your bank account. So, you are not held back by the instrumentality or instruments of a normal bank account which you have your cheque, or you have your ATM card, to be able to effect transaction. That is the key difference.
Financial expert Chukwu continued,
“So you have faster speed of execution of transactions; and again, you also have the fact that, each transaction, when you execute it, is conclusive, in the sense that there is no issue of reconciliation or all that. You know sometimes, when you make a payment with your POS, you have the issue that the money is hanging. One party say the money is debited, and the other party has not received the money. You won’t have that issue with e-naira, because once you execute payment, it is immediately received by the other party.
Notwithstanding the positive sides of e-wallet, there are concerns of how this laudable idea of the CBN will work in Nigeria. Mr. Johnson Chukwu again said,
“If you lose your e-wallet, that means, if you lose the access code to your wallet, you’re going to find it difficult to retrieve your money…
“Another issue is, are you sure the technology is such that there would be a handshake between one user and the other user, so that when you move your money from your wallet to my wallet it will freely move into my account? These are some of the so many concerns; and then the technology is still being understood. I mean, nobody has a perfect understanding of technology.
He stressed that, based on the likely challenges that might be encountered at the initial stage of launching e-wallet in the country, “the Central Bank is taking one step at a time. It is not going to just open up the whole market system … that is why it defines, (set) limits to digital transaction that each user of digital currency can execute at the onset of the implementation.
He gave insight to the difference between Nigeria’s e-naira, e-wallet and crypto currency.
“The concerns at the national level is that, digital currencies in most instances, private money (crypto currency), have been used as means of financing illegal transactions; but this time around, we are talking about Central Bank issued and managed digital currency. So, it is different from private monies which you call crypto currencies; and that risk that it could be used in a way that is not traceable, is minimal.
CEO Chukwu reiterated that,
“The digital currency is issued by the CBN and it is called central bank digital currency. The digital currency is backed up by the good fate of Central Bank of Nigeria, that for every digital currency you hold, the CBN can give you physical naira, or any other note, in form of exchange for that currency.
“One of the things CBN is to control, is the volume of money in circulation; so e-money is going to be integral part of the money in circulation. Operating e-naira, does not expand the volume of money in circulation. So, e-naira may not have a life of its own like what we have with private money (crypto currency)…
He affirmed that,
“What e-naira does is that, it is going to improve on speed of transaction, reduce the costs of financial transaction, encourage heavy home bound remittances or domestic remittances for Nigerians in diaspora because they are not going to go through to western union or any of these money transfer organizations to be able to move your money. With your e-wallet you can move money to anywhere or anybody. In terms of parity, it will maintain parity with the local currencies. Inflation of local currency absolutely will remain.
While analysts are canvassing for public sensitization, on e-wallet, because of its sensitivity, Mr. Chukwu believes the advent of this technology, will promote financial inclusion. He once again affirmed,
“…what we should bear in mind is that, if you do a transaction through a POS or a card, there is the possibility that the transaction may be inconclusive; that will not operate under the digital currency, … once you effect a transaction, it is done immediately.
Johnson Chukwu is also optimistic that, Nigeria can benefit maximally from this creditable idea of the Central bank as long as they are willing to embrace technology like people from other climes. He argued,
“Technological platforms is what is obtained anywhere in the world. Then our technological platforms will not be different from what obtains in any other place in the world.
“Apart from that, when you talk of financial inclusiveness, because it is one of the key elements of e-naira, you don’t need to have a bank account before you have your e-wallet; unlike the current platform, that you must have an account …
Chukwu stated the modalities for operating e-naira account, while stressing the benefits to non-account holders,
“…because the first face will involve people who already have account; but subsequently, the next face will include people who do not have a bank account, which means anywhere you are, once you have your e-wallet, you can receive money, you can make payment… e-naira will give people who don’t have access to the financial system, the opportunity to execute financial transactions and store their financial assets in their wallet.
While this initiative of the CBN sounds interesting and praiseworthy, Nigerians cannot but wait to see how this idea of the bankers’ bank would be implemented in the country.