CBN explains why Nigeria needs e-naira

The Central Bank of Nigeria has explained the economic importance of e-naira, a digital currency it promised to launch by the end of 2021.

The Director, Information and Technology, CBN, Rakitya Muhammed said that the adoption of digital currency would boost cross-border trade and enable the apex bank to formulate better macroeconomic policies.

Muhammed said this while speaking virtually at the Third Quarter Industry Forum of the Committee of E-business Industry Heads held in Abuja on Wednesday, September 22, 2021.

She said, “If people adopt more of the usage of the e-naira, then we will be able to have more data to formulate better macroeconomic policies.

“And when countries come on board and create their own digital currencies then we will be able to have a faster exchange of currencies and therefore we might be able to boost cross-border trade at a much lower cost.

“Of course payment efficiency, even though we know that Nigeria has one of the best payment systems in the world, we will still be able to improve on that.

“We believe that the e-naira will be a catalyst for digital economy because the people who are outside the formal banking sector will be integrated.”

On the e-naira design, Muhammed said that the CBN had concluded its development, adding that the design would soon be unveiled. 

She further said that the digital currency would be a legal tender like the fiat naira, noting that the e-naira would not replace but complement cash notes.

“In terms of the e-naira design, it will be a legal tender just like cash which is one of the fundamental differences between it and the cryptocurrency.

“One, e-naira will be equal to one fiat naira, and we adopted a two-tier retail model that would be a lot less disruption into the financial system.

“Our banks, payment service providers, and Fintech are all going to be on board and we are going to key to the infrastructure they have already and incorporate the new system.

“It is not meant to replace the cash we have, but only to supplement,” she said.

Muhammed had earlier in June said that the CBN’s plan to come up with digital currency is to make remittances travel easier from abroad to Nigeria.

She added that the e-naira would accelerate the ability to meet the target, regardless of one’s country of residence.