Nigeria’s adoption of the Central Bank Digital Currency (CBDC) or the eNaira and its supporting technology or block chain, can increase the country’s GDP by $29 billion over the next 10 years. President Muhammadu Buhari has said.
The president made this declaration on Monday when he launched the eNaira in Abuja.
With the introduction of the eNaira, the government would be able to send direct payments to citizens eligible for specific welfare programmes as well as foster cross border trade, the president noted in a statement issued by his spokesman, Femi Adesina.
He said that CBDCs, together with digital innovations, can foster economic growth through better economic activities, increase remittances, improve financial inclusion and make monetary policy more effective.
Justifying his reasons for approving the development and ultimate introduction of the eNaira, Buhari said: ‘In recent times, the use of physical cash in conducting business and making payments has been on the decline. This trend has been exacerbated by the onset of the COVID-19 pandemic and the resurgence of a new digital economy.
”The absence of a swift and effective solution to these requirements, as well as fears that central banks’ actions sometimes lead to hyperinflation created the space for non-government entities to establish new forms of “private currencies” that seemed to have gained popularity and acceptance across the world, including here in Nigeria,” he noted.
”Needless to add, close monitoring and close supervision will be necessary in the early stages of implementation to study the effect of eNaira on the economy as a whole.
”It is on the basis of this that the Central Bank of Nigeria (CBN) sought and received my approval to explore issuing Nigeria’s own Central Bank Digital Currency, named the eNaira,’’ he said.
The president noted that countries like China, Bahamas and Cambodia have started issuing their central bank digital currencies, and explained that a survey by Bank for International Settlements had shown that “90 percent of countries are actively researching the potential for central bank digital currencies; 60 percent were experimenting with the technology, and 14 percent were deploying pilot projects.”
The President noted that with the launch of the eNaira, Nigeria has become the first country in Africa, and one of the first in the world to introduce a digital currency to her citizens.
He assured Nigerians of the safety and scalability of the CBDC system, said the journey to create a digital currency for Nigeria began sometime in 2017.
In his speech at the event, the governor of the CBN, Godwin Emefiele, disclosed that 33 banks in the country have been onboarded unto the eNaira platform.
According to Emefiele, the central bank has minted N500 million of the eNaira, out of which N200m has been released to the banks.
In a note introducing the eNaira platform, the CBN said on Monday that the eNaira is the digital form of the Naira, issued by it in line with Section 19 of the CBN Act.
“It is a direct liability of the Bank, a legal tender and will form part of the currency-in-circulation and will be at par with the physical Naira (that is 1:1),” it said.
“The eNaira shall complement traditional Naira as a less costly, more efficient, generally acceptable, safe and trusted means of payment. In addition, it will improve monetary policy effectiveness, enhance government’s capacity to deploy targeted social interventions and boost remittances through formal channels,” the central bank explained.