With the recent launch of the eNaira, Nigeria’s digital currency, financial digitalization in Africa’s most populous country has been taken to a higher level, as this will bring about innovations and improvements that come with an increased focus on electronic transactions, local experts have said.
Nigerian President Muhammadu Buhari on Monday launched the eNaira, the country’s central bank digital currency (CBDC), becoming the first African nation to introduce an official digital currency and one of the earliest in the world.
Local financial and economic experts lauded the development, predicting a bright future for digital currency in the West African country.
Tope Fasua, an economic analyst and former banker, described the adoption of digital currency as “commendable”, saying it was a step in the right direction by Nigeria since it will benefit the economy by saving the huge cost of managing physical cash and including more Nigerians in the financial sector.
“It will promote financial inclusion, as those who do not have bank accounts can easily key into the eNaira,” said Fasua in a recent interview with Xinhua.
Fasua, who heads the Global Analytics Consulting Limited in Abuja, said among other benefits of digital currency, the new innovation will also help in tracking money laundering and fraud as the data generated will enable authorities to do their work better in preventing such acts.
In late September, the Central Bank of Nigeria (CBN) eNaira website was test-run ahead of the proposed official launch.
Already, 33 banks are fully integrated and live on the eNaira platform, with over 2,000 customers onboard and over 120 merchants successfully registered on it at the time of the eNaira launch, said Godwin Emefiele, the CBN governor, at the launch of the eNaira on Monday.
The CBN has given careful consideration to the entire payments and financial architecture and has designed the eNaira to complement and strengthen the ecosystems and has implemented security safeguards and policies to maintain the integrity of the financial system, Emefiele said.
The Nigerian top banker said with the eNaira, there would be strict adherence to the anti-money laundering and combating the financing of terrorism standards in order to preserve the integrity and stability of Nigeria’s payment system.
Uche Uwaleke, a professor of finance and capital market at the Nasarawa State University in central Nigeria, said the roll-out of the eNaira will have far-reaching implications on the future of the country’s banking sector.
“All said, the launch of the CBN digital currency is an important milestone which holds a lot of promise for the financial system in Nigeria and the banking sector in particular,” he said.
There remains skepticism around the digital currency, but Ndubisi Nwokoma, an economic policy analyst in Lagos, said this skepticism will fade away as implementation progresses.
“It is a worthy financial innovation and problems that might arise can be resolved as soon as they rear their heads,” he told Xinhua on the phone, calling on the authorities to sensitize citizens on the modus operandi.
During the unveiling of the eNaira at the State House in Abuja on Monday, Buhari said the journey to create a digital currency for Nigeria began sometime in 2017, adding a global trend in recent times is that the use of physical cash in conducting business and making payments has been on the decline.
“This trend has been exacerbated by the onset of the COVID-19 pandemic and the resurgence of a new digital economy. Alongside these developments, businesses, households, and other economic agents have sought new means of making payments in the new circumstances,” he explained.
An overwhelming majority of central banks across the world have started to consider issuing digital currencies in order to cater to businesses and households seeking faster, safer, easier, and cheaper means of payments, in response to the aforementioned developments, Buhari said.
“A handful of countries including China, Bahamas, and Cambodia have already issued their own CBDCs,” he noted, saying the adoption of the CBDC and its underlying technology, called blockchain, can increase Nigeria’s gross domestic product by 29 billion U.S. dollars over the next 10 years.
He said alongside digital innovations, CBDCs can foster economic growth through better economic activities, increased remittances, improved financial inclusion, as well as more facilitated cross-border trade. Enditem