All You Should Know About eNaira – Nigeria’s Digital Currency Set to be Launched on the 1st of October

All You Should Know About eNaira – Nigeria’s Digital Currency Set to be Launched on the 1^st of October

The Central Bank of Nigeria is set to launch the eNaira on the 1st of October, a day set aside to celebrate the country’s independence anniversary whilst highlighting its achievements so far. The government previously launched Project Giant on the 24^th of June 2021, to produce and issue “eNaira – a government-controlled digital currency in Nigeria. This is followed by a circulated presentation to licensed Financial Institutions (FI) on the 27^th of August 2021, to provide guidelines on the issuance and operation of eNaira in Nigeria. 

eNaira 

The eNaira will be a “complementary” legal tender in Nigeria with the same exchange value as the Naira and maintain a “parity of value” with the Naira. The eNaira is built on blockchain open ledger technology, this means there can be no duplicate or fake eNaira. Each eNaira note will be unique. Upon launch, the eNaira is expected to be purchased by Nigerians through Financial Institutions (FIs) and transferred into e-wallets maintained by customers. 

eNaira – Nigeria’s Digital Currency and Cryptocurrency

At its most basic, cryptocurrency is a digital asset that utilizes computer code and blockchain technology to operate somewhat on its own, without the need for a central party like a person, company, central bank or government to manage the system. eNaira on the other hand is a government-controlled and government-backed digital currency predicted to be more stable than cryptocurrency as its value is to equate that of the country’s official currency. 

Read Also: Nigeria is Leading the Surge in Africa’s Adoption of Cryptocurrency

Benefits of eNaira

eNaira is actual money earned and maintained by customers in their e-wallets. As a result, customers will be able to transact with it like the naira notes without involving intermediaries. This is unlike digital banking which involves customers carrying out transactions with money maintained by them in a bank. 

eNaira and its elimination of intermediaries are likely to:

• Reduce the cost and time of transactions
• Make it easier to carryout cross-border transactions
• Provide opportunity for unbanked Nigerians to transact with eNaira without using a private bank account

The eNaira Promotes Financial Inclusion

The eNaira will allow the vast majority of the unbanked Nigerians into the financial economy. With the eNaira, salary payments and payments for goods and services can be concluded.

Why Use the eNaira?

The eNaira has a low-cost advantage when compared to FIAT. Daily transfers between accounts are at no cost to the customer. 

Is the eNaira Safe?

The eNaira is designed to solve verification risks by assuring all holders that each eNaira is a valid token. This authenticity is achieved by building the eNaira on the blockchain. 

Operation of eNaira

eNaira will be issued by the CBN from their Stock Wallet to intermediaries, which includes licensed FIs for supply to individuals. As a result, FIs will maintain a treasury wallet to receive eNaira from the CBN. Mondaq.com notes that eNaira transactions will operate on new and existing systems including the Nigerian central switch – the Nigeria Inter-Bank Settlement System Plc (NIBSS). There will be four major parties in the operating model of eNaira.

1. The CBN – supply of the eNaira
2. The licensed FIs – issuing eNaira to customers and monitoring digital transactions carried out under their institution
3. Businesses and merchants – maintaining compliance with the CBN regulation on KYC (know your customer) and AML/CFT (anti-money laundering/combating the financing of terrorism)
4. Customers – maintaining an eNaira wallet

The eNaira Wallet

Once the eNaira has been launched on the 1st of October, the CBN will provide an e-wallet for customers until FIs can develop and launch their own wallets. The wallet will include three tiers:

Wallet	Cumulative Balance Limit	Transfer Limit	KYC Requirement
Tier 1	300,000	50,000	No existing bank account, phone number validated by NIN
Tier 2	500,000	200,000	Existing bank account and Bank Verification Number (BVN)
Tier 3	5,000,000	1,000,000	Existing bank account and BVN
Merchant	No limit	1,000,000	Full KYC requirement and AML/CFT