Nigeria's Central Bank Digital currency (CBDC): An Innovation, a Trap or a Waste?


Monday, 25th October 2021, marks a day in Nigeria's economic history when its Central Bank decided to roll out the eNaira project tagged "Same Naira, more possibilities". According to the project's whitepaper, eNaira is a leap into the nation's plans to digitize trade as well as ensure its cashless economy policy. It is alleged by the Central Bank of Nigeria (CBN) that eNaira would enable households and businesses to make fast, efficient, and reliable payments, while benefiting from a resilient, innovative, inclusive, and competitive payment system.


The eNaira is defined as the digital equivalent of the cash Naira. That is, encrypting Naira note as a diital currency that can be for transactions and sales of products and services in the digital space and carrying the same value as the physical Naira which is the official tender of Nigeria.

While the present government of the day prides itself with the eNaira project as one of it's successes in the launch of the Central Bank Digital Currency (CBDC), this development seems not to gain the accolades of Nigerians, especially the schooled sect on the art and science of digital currencies.

It could be recalled that the Nigerian government through the Central Bank had few months ago banned its commercial banks from transacting cryptocurrency which was seen by the government as a means to funding terrorism rather than a source of income and employment to its teaming youths faced with the plague of unemployment. While the Central bank is meant to play an essential role in the economy by providing a robust, safe, efficient, and inclusive payment system, the case with the Nigerian system has been different as our Naira keeps losing value in the parallel market with dollar making importation way costly and thereby increasing the prices of basic commodities and making life harder for the common Nigerian.


What is eNaira?
eNaira is a central bank digital currency (CBDC) issued by the Central Bank of Nigeria as a legal tender. It is the digital form of the Naira and will be used just like cash.

What makes eNaira different from the money in my bank account?
eNaira is the digital form of the cash and is a direct liability on the Central Bank of Nigeria while the customer deposits are direct liabilities on the financial institutions.

What are the benefits of eNaira?
The benefits of the eNaira are:
Fast, cheap, reliable and available payment channel.
Support digital economy.
Improved economic activities.
Simplified and easy cross border payments and trade.
Inclusion of excluded people in the financial system.
Improved effectiveness of monetary policies.
Ease in tax remittance and collection to support the Country’s growth.
Ease in targeted social interventions to support Nigerians.

Is eNaira safe?
eNaira is safe and secured with cryptographic techniques against counterfeiting, cloning, and other forms of attack.

I took my precious time to download and read the eNaira whitepaper to satisfy my curiosity regarding CBN's motivation and frank intentions for creating the budget sucking eNaira project after it had scared many Nigerians from investing in cryptocurrency. having made a decent livelihood from cryptocurrency since January 2018 to date, it bothers me why a set of leaders who claim to be educated seem not to understand the evolution that has happened with money and how the growth of cryptocurrency in the last decade is reshaping the financial structures of nations and strategically positioned as the future of finance. We've seen how cryptocurrencies has redefined work and wealth from Bitcoin to ZIL.

With the events unfolding within the Nigerian economy, it makes me wonder whether eNaira is actually an innovation, a trap or a waste? The eNaira is purported built on the blockchain technology which pairs its similarity with the cryptocurrency which the same government banned its bans from transacting with. However, we see that eNaira is not decentralized and makes no provision for anonymity of transactions rather seeks to link with user's Bank Verification Number (BVN) which is a tracking tool for all account holders in Nigeria.


It bothers me that Nigerian banks already have been operating a cashlass and ebanking module which allows Naira to be transferred from one account to the other with USSD codes, bank app, POS and many other financial terminals. The eNaira project thus seems to me as a duplication of the existing ebanking protocols and thus, a shear waste of tax payer's money in its creation. Looking further, thee is the tendency that soon some cryptocurency exchanges maybe listing eNaira thereby allowing crypto-CBDC swaps. This may become an avenue to tracking Nigerians who are transacting cryptocurrency especially as each eNaira wallet is linked with a BVN.

Already, many have tagged the eNaira project as "dead at arrival" as the excitement which would have motivated its patronage had been killed with the biased hate and hypocoristic ban of cryptocurrency. The innovativeness of the eNaira project is already suffering a defeat as there are news making waves that eNaira App is removed from Google Play Store after series of complaints and poor Rating. The sincerity of the eNaira project is yet to be defined and for me, its a no no. I think Nigerians deserves something better at least as long as we remain a democratic state.

What are your thoughts on eNaira? let's share in the comments section of this post.