Update: Subsequent to this post, the launch date of the E-naira was pushed to 25th October 2021
The 1st October, going forward, shall not only be the birthday of Nigeria but also of the CBN’s new digital currency, the ENaira!
It came as a surprise when it was first announced back in August that the Central Bank was introducing a digital currency – the first to be launched by a central bank in Africa. The timing isn’t great considering the economic difficulties that the country is experiencing and given the fact that many of us are actively rejecting the analog naira, a digital version does not immediately make sense. This post takes a look at the Enaira (which we will refer to as “E₦”)to see if it really is something that every citizen should adopt.
What is it?
The E- Naira is the digital version of the Nigerian Naira (₦) the only difference is that its principal usage is for digital transactions whereas the ₦ can also be transacted with in its cash form. Why might this be useful given that the ability to make payments and send money from our bank accounts effectively has digitised our money?
The E₦ is managed and accessed through a special wallet which can be set up on a smart or feature phone and because of this flexibility should be accessible to a large part of the population, including the unbanked.
Same Naira. More Possibilities
Central Bank of Nigeria
CBN’s tagline for E₦ is ‘Same Naira. More possibilities’ Let’s look at what those possibilities include:
How do you get it and use it?
E₦ wallets are the key way to access and use the E₦ and will be familiar to those who use mobile money, cryptocurrency and other similar wallets. ‘Consumers’ aka retail customers access wallets that allow them to make transactions to other consumers, Businesses (aka Merchants) and Government.
There are 3 tiers of wallets for users each with different transaction and balance limits which make the E₦ accessible to those who have no BVN / bank account.
| Tier | Features | KYC requirement |
| Tier 1 | Send/Receive ₦50,000 Cumulative daily balance ₦300,000 | Telephone number, Passport photo, Place and date of birth, Gender, Address, Telephone number |
| Tier 2 | Send/Receive ₦200,000 Cumulative daily balance ₦500,000 | Tier 1 requirements plus: BVN ID |
| Tier 3 | Send/Receive ₦1,000,000 Cumulative daily balance ₦5,000,000 | Tier 2 requirements plus: Physical verification Full KYC |
To create a wallet, the Consumer has to download the app and also choose a bank (yes, an existing commercial bank) to open the wallet through. The wallet has to be funded from an account held at a bank (it doesn’t have to be the same bank at which the wallet was opened) which can belong to the user or a third party. It’s not clear if this transfer of funds to the wallet will incur a cost but I can imagine if it does, that will be off-putting.
Once the wallet is created a number of things can occur:
- E₦ wallet to E₦ wallet transfers. P2P individual transfer
- E₦ wallet to E₦ merchant as payment for goods and services
- E₦ wallet to Bank account in users bank / 3rd party bank
What about cash?
E₦ direct to cash is not allowed, I repeat, E₦ direct to cash is not allowed! If you want to access your E₦ you have to convert it to regular ₦ by transferring it from your wallet to a named bank account at a commercial bank. You cannot transfer E₦ to a merchant and then receive cash. Why then would anyone invest time and energy to open an E₦ wallet when it seems to do less than regular bank accounts currently do?
Why, Why, Why? E-Naira?
The patriot in me wants to be supportive of this initiative but the reasons for doing so are, like dollars, scarce. Whilst there are no earth shattering features that will drive massive adoption of E₦ at this point, here are some benefits:
- Flexibility. It’s possible to use E₦ and the wallet much in the same ways as a bank account e.g. tier 3 wallets allow you to send / receive ₦1m a day which is in line with many banks. Your ability to use it is dependent on the number of others that use it too, perhaps early adopters can push the rest of us to use it and so drive usage.
- Transaction costs. Intra-wallet transfers and transfers to wallets occur at zero cost. Its not clear what banks will charge to fund E₦ wallets but if it is cheaper than current E-transaction costs then this could drive usage. Additional savings will occur because you don’t need to pay VAT or SMS notification fees that are currently paid for regular bank transactions.
- Financial inclusion. E₦ is a big step in the direction of financial inclusion, as far as the CBN is concerned, as they feel that the flexibility and virtual nature of the wallets will enable the unbanked to access banking and other financial services. Government will also use E₦ wallets to make payments to receivers of welfare payments from the state. Remember the ₦5,000 payments made to millions of Nigerians in 2020 and 2021? It’s likely that going forward this will be done through E₦.
Go-live 1st October – UPDATE
The expected go-live date of the 1st October has not gone ahead and a number of reasons have been given including the desire not to distract from Nigeria’s independence day and an unexpected surge in visits to the website which has now been taken down.
If either of these is true it doesn’t speak well of the planning skills of those responsible for the delivery of the initiative. A juicier alternative is that the indefinite postponement is in response to a lawsuit filed by ENaira payment solutions against CBN alleging copyright infringement. The Will Nigeria posted an article about a lawsuit that has been filed against CBN by a company called ENaira payment solutions for copyright infringement: (https://thewillnigeria.com/news/cbn-explains-indefinite-postponement-of-enaira-launch/)
What should you do?
I am not going to be an early adopter of the E₦ as I don’t see a tangible benefit yet. There doesn’t appear to be any advantage to signing up early so I prefer to wait and see what happens.
Thanks for listening!