The "eNaira" will change the Nigerian economy forever, here's everything you need to know. - Droidnine - Tech News and Reviews

Header Ads

The "eNaira" will change the Nigerian economy forever, here's everything you need to know.

The Central Bank of Nigeria recently released some guidelines on the eNaira also known as Nigeria’s digital currency and in this article, that’s what we’ll be discussing. I’ll explore what the eNaira is, what you should know about it and what the effects might actually be for you or every single Nigerian both positive effects and negative effects. 

So, What is eNaira?

In simple terms, it’s Naira but Digital or you could call it cashless Naira. It is not a cryptocurrency, but it uses technology for Digital Currencies from a company called Bitt Inc. It is also called a CBDC which means Central Bank Digital Currency and countries like China have one too.

eNaira serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions when compared to cash payments. It has an exclusive operational structure that is both remarkable and nothing like other forms of central bank money. The eNaira is set to launch on the 1st of October and as we all know, that day is also the day of Independence for  Nigeria, so it just made sense that they would want to do it then.

Why did Central Bank Propose this?

In February of 2021, the CBN implemented a nationwide ban on cryptocurrency. According to CBN, they did not regard cryptocurrency as money and banks must not touch cryptocurrency or enable it in any way, shape or form. 

Two months later, the Governor of the Central Bank of  Nigeria announced that Nigeria will be considering its own digital currency. At the height of the “crypto ban”, Nigeria was the 2nd in the world with regards to the volume of cryptocurrencies being traded on Paxful’s platform,  it showed that the parallel market was very strong and it was putting pressure on the value of the Naira currency. 

Basically, one major way  Nigeria earns foreign exchange apart Oil is remittances or people sending in Dollars,  Pounds and such into Nigeria, with Bitcoin, you won’t be able to control who’s sending what in and out of the country and if it took over, it could render financial institutions somewhat less useful.

We are also facing a major dilemma on the exchange rate front, we have hit a 530 Naira to $1 all-time high.  One of the reasons we couldn’t get a $1.5 Billion Dollar loan in Nigeria from the World Bank in June of 2021 was because of our exchange rate system. This brings us to today, in September, less than a month before the eNaira launch in October, and Nigeria has started to lay down some ground rules. 

Now, what is the eNaira process like?

First things first, there will be different levels or tiers of wallets and there will be launch stages. Let’s talk about Stages.

Stage 1: The Central Bank says it will be responsible for handing the first product component that includes issuing, distribution, redemption and destruction of the eNaira currency. 

Stage 2: Financial Institution  Suite where licensed financial institutions like Banks will be able to request currency or issue stable coins, manage digital currency across branches, KYC, identify and AML compliance capability. So yes, the eNaira will have a stable rate and not be able to bear interest like cryptocurrency.

Stage 3: The Government Suite, will become more involved and will process digital payments sent and received from citizens and businesses. 

Stage 4: Merchants who are expected to provide low-cost payment and business management software, POS, emote payment solutions, online capabilities, transaction analysis and reconciliation.

Stage 5: Retail Consumer Suite, which will focus on the architecture which will be expandable to enable innovation, features advanced privacy and security.

What about the Wallets now?

There’s also different levels or tiers of the wallets. Because the deadline is really close, there will be an existence of what is called a Speed Wallet.  These wallets are to enable CBN to meet its October 1st Deadline. They say it’s not a  competition to existing banks but another means of the transaction until a time where other banks can plug into the Digital Wallet with their own infrastructure or technology.  

So what are the different wallet levels?

Tier 1: The first tier allows users with no bank account to use the Speed Wallet. However, they must submit a passport, their name, place of birth, gender address and phone number. This will have a daily limit of N50,000 for sending and receiving and the minimum requirement for using the first-tier wallet is a phone number that will be validated as a National Identity Number.

Tier 2: The second tier wallet requires that the users must own an account with an existing bank. At this level, they can send and receive 200,000 daily with a cumulative balance daily of 500,000. The minimum or lowest requirement is a BVN, or bank verification number.

Tier 3: The third tier allows for daily send and receives transactions up to 1,000,000 with a cumulative balance daily of 5,000,000. The minimum requirement is the same as the 2nd tier and that’s your BVN.

Tier 4:  The fourth tier allows users to send and receive 1,000,000 however, there’s no limit to the amount of money that can move to their bank accounts. The minimum requirements are as the tier 2 and 3 however,  there will be more KYC that is linked to the Anti Money Laundering or AML  and Combating Financing of Terrorism or CFT.

No comments

Powered by Blogger.