is eNaira a wrong turn or step to the right direction?

It’s quite a thrilling fact and a notion to applaud that countries, all and sundry are turning their wheels, following technological innovations.

Nigeria has become one of the very first countries that took what we might be tempted to call a bold step in towards digitalization after they launched their digital currency eNaira. There have been ripples of doubts about this sudden out of the blue invention, so many questions are left unanswered at least not yet since the introduction of this digital currency and questions standing out are;

Is the eNaira the solution to the corruption, fraud, unemployment and political bureaucracy that have proven to be endemic in the country, Generally the questions in a nut shell is what problem(s) can the eNaira solve.

LET’S TAKE IN BITS

What is eNaira?

The eNaira is the Central Bank Digital currency(CBDC) that is to say naira but not in physical form but digital form, it is backed up the sovereign Nigeria and the fiat Naira currency . Nigeria banned cryptocurrency in a time when the country was the second largest in cryptocurrency trading in the world, CBN stopped the transactions of banks involving all cryptotocurrencies because as at that time cryptocurrency transaction nearly rendered the CBN less relevant as they were no longer in control of what comes in and goes out of the country. After which the central bank intensified effort in bringing out a look alike cryptocurrency and after many months here we are with eNaira. So if eNaira can be likened to a currency it would be the US Dollar Tether (USDT).

How did Nigeria achieve this?

Owing to the fact that Nigeria ranks very low in the graph of digitalization most people are held in awe and ponder how a country with limited zeros and ones can achieve something as developing our digital currency, did we just wake up at a dawn of a new day and skyrocket in the digital rank? Well the answer remains no. Reality of the eNaira was a product of the partnership between the Central bank of Nigeria(CBN) and a Barbadian company known as Bitt Inc. according to CBN Bitt inc. stood tops out of over 100 companies that bided for the contract. Bitt Inc. is a company that makes use of their blockchain to enable safe Pair to Pair(P2P) transactions and mobile money. The company according to the CBN is tested and trusted as they have also achieved such a great feat in the Eastern Caribbean Central bank.

Will this currency be controlled by Bitt Inc. Company?

Since Bitt. Inc is a private company, if CBN allows them to have total control on issuing, distribution and destruction of the eNaira then they have resurrected the demon they tried to kill in banning cryptocurrency. The Bitt Inc. has registered as a limited liability company in Nigeria and central bank has a huge share in the company and this gives them a chance to vote on how this digital money should be regulated in the country’s financial/ transaction market.

Who will own eNaira and what are the requirements?

The CBN has iintroduced a speed wallet which allows all citizens of the country to have access to this digital currency. But all fingers they say are not equal hence there are different levels at which one or a company can access the currency.

Normal citizens without an account number but having a minimum of phone number can access the digital currency but with a daily transaction limit of fifty thousand Naira.

The second level belongs to citizens having an account number and a Bank verification Number. This category of people will have a daily increased limit of either five hundred thousand naira or five million naira 

The last level belongs to the merchants who have KYC(Know Your Customer) and also CFT(Combating Financing of Terrorism) policy. There will bo no transaction limit for this category.

What problems can eNaira Solve?

Despite the so many uncertainties surrounding the eNaira, there are some problems that can be solved by this digital currency.

1. Building a stronger naira: the fiat Naira has depreciated so much in value but with eNaira standing beside it can give the fiat currency a former value.

2. Inflation control: the success of eNaira can help the Central Bank of Nigeria control inflation. It is so because the resources they spend in printing and transporting paper currency will reduce and with that inflation can be controlled.

3. Speedy payment: all payments that will be made with eNaira will be fast 

4. It will be cheap and AML(Anti Money Laundry) compliance will be high.

What Problems might it create? 

1. Data compromise: owing to the fact that there will be many data both for merchants and individuals revolving in one system if there arises an issue of cyber theft its effect will be totally catastrophic.

2. Centralized control: The Central Bank of Nigeria will have a centralized control and a final say in what happens to the eNaira currency.

3. One will not factor out the tendency of further financial disintegration if all doesn’t go well with the eNaira as planned and also the User interface might not be awesome hinging on the fact that Nigeria still has a very long way to go in technology.

No matter how much we push ourselves to answer so many questions, one fact stands sure, so many questions will remain unanswered, in the course of this eNaira adventure, so many mistakes will be made, so many lessons will be learnt but till then let’s be optimistic that our country is at least for once on a course in the right path.