The Central Bank of Nigeria is making waves across Africa as it prepares to launch its first digital currency, CBDC called the eNaira, which will make it the first African country to do so.
Late in September, the Central Bank of Nigeria’s eNaira website went live ahead of schedule, confirming the already burning speculations that the country was gearing up for crypto. Within 24 hours following the launch, it received more than a million hits.
The Governor of the Nigerian Central Bank has stated that the CBDC (Central Bank Digital Currency), which has been widely anticipated, will be unveiled in the coming days. Godwin Emefiele, the governor of the Central Bank of Nigeria, said that the e-naira digital currency will be the first of its kind in Africa.
However, when the news of the cryptocurrency launch was revealed months ago, the central bank had hoped to reveal it on October 1, 2021, but because of various events which were also scheduled to occur in celebration of Nigeria’s 61st anniversary of independence, the CBN postponed the unveiling of the CBDC, reports stated.
Although the CBN has not announced a new launch date, whether it is months or days away, it should not come as a surprise that Nigerians could have several questions concerning the much-discussed virtual currency.
The CBN stated that eNaira – a central bank-issued digital currency that provides a unique form of money denominated in Naira – would serve as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments.
eNaira presents itself as the digital form of cash and is a direct liability on the Central Bank of Nigeria while the customer deposits are direct liabilities on the financial institutions. Regardless, very many Nigerians still question the validity of the currency on whether it is actually a cryptocurrency.
According to reports by Coin Rivet, Olumide Adesina, a CEO of Nigerian analyst firm TM Analytics believes the eNaira can’t replace the crypto market or fight and win Bitcoin. However, he stressed it could complement the crypto market and provide leverage for a growing number of people from Nigeria.
Some praise eNaira’s benefits for financial inclusion, while others are concerned it would give central banks more control over citizens’ financial rights through the removal of intermediaries.
Nigeria to become the first country in Africa to launch CBDC (eNaira)
Despite the fact that the eNaira is believed to be the next digital revolution for Nigeria, there are still are a number of roaming questions about the entire venture and whether it will offer more benefits and than cons as anticipated.
According to the official website, the eNaira is expected to make remittance transfers much easier while cultivating economic growth, limiting fraudulent behaviour, and while offering secure transactions, among other benefits for its use.
Rakiya Mohammed, the bank’s director of information technology, recently explained eNaira could make remittance transfers easier for Nigerians working abroad.
South Africa also recently announced a trial of central bank digital currencies (CBDCs) for cross-border payments. The central bank said it could motivate other financial institutions around the world to work towards using the technology.
Founder and CEO of cryptocurrency and digital asset exchange platform Botmecash, Oluwasegun Kosemani, said there was a rising interest in the use cases and value Bitcoin offers in Lagos, Ibadan, Abuja, Kaduna, Abeokuta, and among the Igbo tribe traders who import and export from China and Turkey.
“This will blow up soon when the eNaira launches in Nigeria,” he said, adding that eNaira “is the beginning and pathway to the end of cash in the country”.
Earlier this year, the CBN had issued a ban on cryptocurrency transactions and required local institutions to single out and shut down accounts with crypto affiliations. This move was done to counter the growing threat of Bitcoin since the CBN viewed virtual coins as a threat to their fiat currencies.
However, despite the ban, citizens still continued to purchase cryptocurrency hence leading to the CBDCs to became the alternative. The CBDCs and cryptocurrencies both share similar features such as electronic transfer but the major difference between them is centralization.
Cryptocurrencies like Bitcoin are not regulated and the anonymity of their transactions is one of their best features. On the other hand, CBDC transactions are supervised by a country’s central financial authority.
Check out: What Type of Cryptocurrency Wallet Should I Get and How Safe is It?
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