CBN GOVERNOR; e-NAIRA COULD INCREASE NIGERIA’S GDP BY $29 BILLION INN 10 YEARS

The e-Naira which was launched on October 25, 2021 is the first central Bank digital currency in africa.

According to the CBN governor, Godwin Emefiele, the introduction of the e-Naira and its underlying block chain could increase Nigeria’s Gross Domestic Product (GDP) by $29 billion, in 10 years.

.”Let me note that aside from the global trend to create Digital Currencies, we believe that there are Nigeria-specific benefits that cut across different sectors of, and concerns of the economy.  ‘The use of CBDCs can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country,” he said.

Between the few weeks of going live and when the digital currency was officially launched, Mr. Emefiele disclosed that  the eNaira platform witnessed overwhelming interests  and encouraging responses from Nigerians and other parties across the world with over 2.5 7 million daily visits to the website.

He added that 33 banks were fully integrated and live on the platform; N500 million successfully minted by the Bank; N200 million issued to financial institutions; and over 2,000 customers onboarded.

Since the launch, customers who download the e-Naira Speed Wallet App are able to onboard and create their wallet; Fund their e-Naira wallet from their bank accounts; transfer e-Naira from their wallet to another wallet;  and make payment for purchases at registered merchant locations

Like other digital payment systems, the risks associated with the e-Naira initiative had led the International Monetary Fund (IMF) observed that while the e-Naira has the potentials for Financial Inclusion and boost Diaspora remittances, the CBN must closely watch its operations as it could pose risks to Nigeria’s financial stability.

The fund said, “Nigeria is among the key remittance destinations in sub-Saharan Africa, with remittance receipts amounting to $24 billion in 2019.

“Remittances typically are made through international money transfer operators (e.g., Western Union) with fees ranging from 1 percent to 5 percent of the value of the transaction.

“The eNaira is expected to lower remittance transfer costs, making it easier for the Nigerian diaspora to remit funds to Nigeria by obtaining eNaira from international money transfer operators and transferring them to recipients in Nigeria by wallet-to-wallet transfers free of charge.

“Exchange rate reforms, including a unified market-clearing rate, that reduce the gap between official and parallel market exchange rates would enhance the incentives for using e-Naira wallets to send remittances.”

On the risks, the IMF said, “Like digital currencies elsewhere, the e-Naira carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability.

“For example, e-Naira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks.

“Relying as it does on digital technology, there is a need to manage cybersecurity and operational risks associated with the e-Naira.”

The Fund said it was available to help with technical assistance and policy advice.

The organisation disclosed that its Monetary and Capital Markets Department has been involved in the e-Naira rollout process, including by providing reviews of the product design.

It said, “The IMF is ready to collaborate with the authorities on data analysis, cross-country studies, sharing the e-Naira experience with other countries, and discussing further evolution of the e-Naira including its design, regulatory framework, and other aspects.”