On the 5th of February, 2021, the Central Bank of Nigeria (CBN) released a ruling that ordered all financial institutions to stop any cryptocurrency transactions, and on the 25th of October same year, Nigeria's digital currency, e-Naira was launched, making it one of the only few countries and the first in Africa to introduce and officiate a digital currency, a move which took many people who weren't in the know about plans for the currency by surprise.
While the whole thing is still new and might look unstable or confusing, eNaira is good news for Nigerians outside the country because it can be used to send money or international transactions and includes cheaper diaspora remittance options. The CBN stated that the eNaira would ultimately boost remittance inflow to the country. Remittances are an important source of foreign cash for countries in the Sub-saharan region and as the apex bank said, "In Nigeria, it is a key source of foreign exchange as US$23.8 billion flew into the country in 2019. The flow of remittance into Nigeria highlights its strategic position in Sub-Saharan Africa as it is the top destination for remittance flows." The CBN hoped to stimulate remittance inflow with the introduction of its 'Naira 4 Dollar' initiative.
The eNaira would provide a secure and cost-effective process for remittances, reduce the number of remittances flowing through informal channels as the cost will be significantly low. In general, eNaira will make remittances easier, faster, more secure, and cheaper.
If you are like many others who were shocked by the launch or if you've heard the news about it but you are not sure what it is all about, we have put together six important things that you should know about.
What is the eNaira?
The eNaira is the digital form of the Naira currency that is built on a blockchain open ledger technology that prevents duplication or creation of fake units. Note that while the eNaira is a digital currency, it is not the same as a cryptocurrency. The eNaira has the backing of the Nigerian government and is not like the other cryptocurrencies whose prices will fluctuate due to market rates. The eNaira was created as part of a measure to solve the challenges Nigerians face when receiving money abroad, also to ease transactions, ease the need for physical and offer digital stability.
How will the eNaira work?
One eNaira will be at par with the physical Naira, 1 eNaira= 1 Naira. The digital currency will be provided by the Central Bank of Nigeria (CBN) to the various financial institutions that serve as intermediaries. In turn, the intermediaries will help supply it to individuals and customers. The institutions will maintain a treasury wallet to collect eNaira from the CBN, oversee ID verification, eNaira payment processing, and generation of wallets for Nigerians to keep their eNaira. An eNaira wallet, which serves as a digital storage will be required to hold and use the naira which will be made accessible only through the wallets. There is an available app called 'the eNaira speed merchant app' which is compatible with iPhone and Androids through which transactions will take place.
What are the transactional limitations of eNaira?
The limits and transactional limitations of eNaira have been drawn out by the CBN. There are different tiers of operations on transactions. For Tier 0, the daily transaction and balance speed wallet limits are N20,000.00 and N120,000.00, respectively. For Tier 1, daily transaction and balance speed wallet limits are N50,000.00 and N300,000.00, respectively.
For Tier 2 customers, daily transaction and balance speed wallet limits are N200,000.00 and N500,000.00, respectively. Finally, for Tier 3 customers, daily transaction and balance speed wallet limits are N1,000,000.00 and N5,000,000.00, respectively, while there isn’t any limit for Merchants.
How do I register and use the platform?
To register, you need to first download the app from the Google Play Store or Apple store.
Select your preferred bank
Enter your identification number and tax identification number
Fill in the relevant information, accept the terms and conditions and submit to complete registration.
There are various requirements for onboarding, that of the financial institutions shall be done automatically by CBN while Merchants' will be done by the Financial Institutions.
Will there be charges for transactions?
The CBN has stated that charges that will originate from transactions on the application shall be free for the first 90 days commencing from October 25th, 2021. After that, electronic funds transfer below N5,000 is charged N10; N5,001 – N50,000 is charged N25 and for above N50,000, a N50 charge is associated.
A huge advantage of the eNaira is that it would ease financial transactions between individuals, businesses, non-governmental organizations (NGOs), religious institutions, Nigerians in diaspora, MDAs (Ministries, Departments,Agencies), etc.
The App has been removed from the Google Play store.
Barely 48 hours into its launch, the eNaira speed app was removed from the Google play store due to a large number of poor reviews and criticism. It is still available on the Apple store, with a poor rating of 2.6 over 5.