The eNaira is a Central Bank of Nigeria-issued digital currency that provides a unique form of money denominated in Naira. It serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments. eNaira has an exclusive operational structure that is both remarkable and nothing like other forms of central bank money.
Here are 10 major things you should know about the digital currency and how it works:
1. It’s the digital form of the Naira
The eNaira is the digital form of the Nigerian physical Naira currently in circulation. It is issued by the CBN in line with Section 19 of the CBN Act. In essence, it is a direct liability of the Nigerian apex bank. Built on a blockchain open ledger technology that prevents duplication or creation of fake units, each eNaira note will be unique and different.
2. Is it same as Cryptocurrency?
No, it isn’t. The eNaira is simply a digital currency issued and backed by the authority of the Nigerian government and is a legal tender equivalent to the physical cash. It is quite unlike Bitcoin and other cryptocurrencies that have no backing of established authorities. The eNaira is pegged against the traditional Naira and will not fluctuate due to market influence at a different rate from the traditional Naira. The eNaira basically eases transactions and offers digital stability, thus reducing the need for physical cash.
3. eNaira at par with N1
The digital currency is a legal tender and will form part of the currency-in-circulation. More importantly, it will be at par with the physical Naira, maintaining the same exchange value as the Naira What this means it is of the same value with one traditional Naira.
4. What’s eNaira Wallet?
The eNaira wallet is required to access, use and hold the currency. It will be exchangeable for other Central Bank Digital Currencies (CBDC) and will be made accessible only through the eNaira Wallets which is the digital storage that holds the eNaira.
5. How exactly will it work?
The eNaira will be provided by the CBN to intermediaries (i.e financial institutions) who would in turn help supply to individuals/customers. These institutions would maintain a treasury wallet to collect the currency from the CBN. They would thereafter oversee ID verification, payment processing, and generation of wallets for Nigerians to keep their electronic Naira. Through the app, customers would be able to identify a bank of their choice, connect to their bank accounts and carry out transactions.
6. Are there charges for using the eNaira platform?
The CBN said that charges for transactions that originate from the eNaira platform shall be free for the first 90 days commencing from October 25, 2021. However, it would revert to applicable charges as outlined in the Guide to Charges by Banks, Other Financial and Non-bank Financial Institutions.
7. Why eNaira in the first place?
The eNaira is expected to complement traditional Naira as a less costly, more efficient, generally acceptable, safe and trusted means of payment. In addition, the CBN said in its guide that it will improve monetary policy effectiveness, enhance government’s capacity to deploy targeted social interventions and boost remittances through formal channels. There is the elimination of third party in transactions which could reduce time and cost of transactions. More importantly, there is the ease with which it would complement inclusion of excluded people in the financial system.
8. Who will be affected by the digital disruption?
A major advantage that the electronic Naira brings is deepening of financial inclusion. Hence, it would ease financial transactions and affect individuals, businesses, non-governmental organisations (NGOs), religious institutions, Diaspora Nigerians, MDAs, etc.
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