Buhari bets on eNaira to boost remittances, cross-border trade

 

NIGERIA’s President Muhammadu Buhari, on Monday, said the newly launched eNaira platform, which is Nigeria’s Central Bank of Nigeria (CBN)’s own digital currency, would increase remittances, foster cross-border trade and improve financial inclusion.

He said it would enable the Federal Government to make payments directly to  the bank accounts of those participating in government’s welfare programmes.

Buhari, who disclosed this at the launch of the eNaira scheme in Abuja, also said the initiative would help the monetary policy and support economic growth.

“Alongside digital innovations, the Central Bank’s digital innovations can foster economic growth through better economic activities. Indeed, some estimates indicate that the adoption and its underlying technology called blockchain can increase Nigeria’s GDP by $29billioin over the next 10 years.”

The CBN Governor Godwin Emefiele, at the launch, affirmed the president’s stance, saying that the scheme would enable direct and transparent welfare interventions.

He also noted that the scheme would support a resilient payment system ecosystem in the country, while reducing the cost of financial transactions.

“It encourages rapid financial inclusion, reducing the cost of processing cash, increasing revenue and tax collection and facilitating diaspora remittances.”

Giving further insight, Emefiele said the eNaira was the same Naira with far more possibilities.

”The eNaira –like the physical Naira-is a legal tender in Nigeria and a liability of the CBN. The eNaira and Naira will have the same value and will always be exchanged at 1 naira to 1 eNaira,”

The apex bank governor also said that 33 banks were fully integrated on the platform.

“Over 2,000 customers have been onboarded, while over 120 merchants have successfully registered on the eNaira platform.”

The Nigerian government had, prior to the launch of the e-Naira scheme, frowned at some citizens receiving government’s intervention more than once as a result of poor data harmonisation between the monetary and fiscal authorities.

Specifically, Vice President Yemi Osinbajo, at the recently held ministerial retreat, had cited situations where some Nigerians received COVID-19 interventions more than once because the CBN and the Ministry of Industry, Trade and Investment’s partnership was weak.

“More importantly, sometimes we get people benefitting more than once in our intervention because we simply have no line of sight to what is going on one side. The CBN doesn’t know what we are doing, we don’t know what they are doing. That synergy is absolutely important,” he said.

Such a situation is expected to change with eNaira.






     

     

    Economist Kalu Aja, speaking on the Nigerian government’s adoption of eNaira, noted that the scheme  had a low-cost advantage when compared to FIAT.

    “The daily transfers between accounts are at no cost to the holder of the account. Lower transaction cost is a massive incentive as traders will pay no fees for withdrawals and deposits to and from their bank account. No transaction fees reduce the cost of commerce while improving safety,” Aja said.

    The e-Naira would be integrated into the CBN’s foreign exchange process, making it easier for Nigerians to receive remittances, he said.
    Aja further explained that transfers could be from the CBN crediting e-Naira directly to the International Money Transfer Organisation (IMTO).
    “A Nigerian abroad sending $100 to his uncle can debit his US bank account and credit $100 to an IMTO, who will buy eNaira from their corresponding Nigerian bank. The $100 is converted to e-Naira instantly at a far lower transfer fee which is a real benefit and a significant advantage the e-Naira will enjoy,” Aja said.

    Development Economist and Associate Consultant for the British Department for International Development (DFID) Celestine Okeke told The ICIR that beyond the eNaira policy of the CBN, the government must ensure the naira was strengthened by giving manufacturers a competitive edge in an export-driven economy.

    “There must be a focus on export and non-oil beyond the promotion of digital currency,” he said.

     

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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