What CBN Needs to Do to Ensure Acceptability and Sustainability of eNaira

Alt: = "President Buhari and Godwin Emefiele, CBN Governor holding eNaira banner at the launch of eNaira"

The Central Bank of Nigeria, CBN on 25 October 2021 launched Central Bank of Nigeria’s digital currency, CBDC known as eNaira as a replacement to cryptocurrency, making Nigeria the first country in Africa to create Central Bank Digital Currency, CBDC. 

It would not be that easy for eNaira to replace cryptocurrency as cryptocurrencies are giving Naira and other African currencies a run.

According to IMF report, "Cryptoassets pose immediate and serious risks to some emerging markets and developing economies’ currencies such as the naira (Nigeria’s local currency)."

Alt: = "Naira coin and Bitcoin"

A total of $105.6 billion worth of crypto assets were traded between July 2020 and June 2021, representing a 1,200% increase in value. In terms of transaction volume across all regions, Africa leads peer-to-peer (P2P) payment platforms. Africa has topped peer-to-peer (P2P) payment platforms in terms of transaction volume across all regions.

Alt: = "Crypto assets P2P region by region transactions chart for July 2020 to June  2021"

Managing capital flow after “cryptoisation” will require fine-tuning. This is because regulating capital flows using established regulatory tools can be very challenging, especially when value is transferred using new instruments, new channels, and new service providers that are not regulated.”

Other central banks in Africa are now drawing inspiration from Nigeria and are understudying the Nigerian model in creating their countries' digital currencies.

At the Afro-Asia Fintech virtual festival, last month, Kenya’s central bank governor Patrick Njoroge revealed that the apex bank is also exploring the use of a Central Bank Digital Currency (CBDC) to settle cross-border payments, stating that “the issue is not to be first, the issue is to do it right.” 

It therefore behooves on CBN to ensure that Nigeria’s digital currency is not only the first in Africa but the most successful owing to the size of the Nigerian economy.

But will people use it? has been question a lot of people have been asking. To address this question and to persuade the usage of eNaira, Central Bank of Nigeria issued directives that all businesses, merchants must accept eNaira when tendered for payments. Beyond directives, CBN got a lot more work to do to encourage usage of the digital currency.

There are still major barriers for blockchain currencies to overcome, no matter what incentives exist. For most of the world, the use of digital currencies to pay for goods and services is limited to certain niches, CBN has to explore the niches where digital currencies can easily be accepted. The niches includes eCommerce, online lottery, tech etcetera.

If eNaira is going to become mainstream, however, it needs corporate champions as well as innovative outsiders, to  win Nigerians over and to be accepted for cross-border payments and remittances.

What CBN Should Do to Encourage Nigerians to Adopt eNaira

  • Creating much awareness through publicity
  • Partnering with eCommerce Stores
  • Partnering with lottery and betting companies
  • Partnering with big retail Stores
  • Partnering with telecommunications companies
  • Partnering with paid TV and online streaming service providers
  • No or less transactions charges
  • Efficiency and transparency
  • Responsive consumer care services
  • User data security

Creating Much Awareness and Publicity

The Central Bank of Nigeria has a duty to convince Nigerians and Nigerian businesses on why they should adopt the use of eNaira by letting them know the advantages of the eNaira. To achieve this, CBN need to carry out aggressive advertisement. 

Partnering with eCommerce operators

The ecommerce is the chief driver of digital currencies. Most of the crypto currencies are adopted as a means of payments for certain goods and services thereby creating a community of such digital currency users.

eCommerce and digital currencies complement the other very well since they share the same ecosystem, and both appeal to the digitally-savvy users. More purchases are made online by the day and cashless shops (online stores) become more popular, it would be easy for shoppers to hold eNaira wallet, if the online stores accept the payments made with eNaira. 

Integrating the use of eNaira in ecommerce will be additional appealing option for those looking for a fast and more convenient way to pay for goods and services. This shows the high demand for digitally based payments among an online consumer base. Some of the ecommerce stores create wallet account for their customers from which they pay for the goods and services. Others have payment gateway with different payment options. If the CBN partners with these ecommerce operators especially the prominent ones to encourage their consumers to hold and pay from their eNaira wallets. This, if done properly, will go a long way in propelling the adoption and sustainability of eNaira. You may like to read Why eCommerce  Stores Should Accept eNaira.

Partnering with Lottery and Betting Companies

Lottery and sport betting sites are another important niche that have adopted the use of digital currencies. These betting sites create e-wallet for their customers from which the pay for their stakes. The lottery and betting demography is made up of mostly young and tech-savvy population. Central Bank of Nigeria can partner with these companies to adopt eNaira wallets as means or one of the options of paying of lottery and betting stakes in Nigeria.

Partnering with Big Retail Stores

If big retail stores can accept eNaira, it would help in reducing the use of physical cash and cards in our day-to-day payments. Nigerians spend more on household commodities than on any other commodities.

Efficiency and Transparency

The stability, efficiency and transparency are very important by harnessing the potential of eNaira in a form that is useful for everyday people. This, in turn, will set it up to challenge existing physical Naira and digital currencies. The administration and management of eNaira shouldn't be in same way other government assets are managed which can’t compete with the private sector. Poor customer care, poor infrastructure, lack of maintenance culture are some of the inefficiencies in government owned businesses that discourage people from patronizing the government-run businesses except where there is no alternatives. 

Anytime the cryptocurrency trader database is hacked and customers funds stolen, the companies usually buy back the coins, where the customers lose nothing. Can we hope to get same protection from the Central Bank of Nigeria?

Last Line

If key merchants like eCommerce stores, online sports betting companies, tech companies etc give their stamp of approval, we might really see a lower reliance on fiat Naira and actual paper money in our day-to-day lives.

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