‘With this new project, the government will be able to raise Nigeria’s GDP to over $29 billion in the next 10 years. It will give the country’s crumbling Naira a boost, so the government has to increase the financial positions and standard of living of its citizens’
WITH the launch of the highly-anticipated e-Naira on October 25, 2021, Nigeria has again proved that it is the ‘giant of Africa’.
This is a huge achievement for the country. Very few countries worldwide have adopted digital currency into their payment and currency management system. With the launch however, Nigeria is leading from the front as the first country to launch a digital currency in Africa.
Hopefully, this is a huge step taken in a positive direction by the government, which obviously started the project to enable it keep track and monitor the spending of its citizens amongst other things.
Before the launch, Nigeria was ranked as the country with the fourth highest use/transaction of cryptocurrency in the world. It is only inevitable that the government will take a cue from it and then find ways to come up with similar forms of currency.
Through information circulating about the use and impact of e-Naira on the Nigeria monetary system, many people have become curious about what the hype is around the new digital currency.
So, what is e-Naira?
There is need to understand the real meaning of the e-Naira and its difference from the cryptocurrency.
E-Naira is a digital currency issued by the Central Bank of Nigeria. It falls under the category of the CBDCs (Central Bank Digital Currencies).
The name digital currency implies that everything regarding the e-Naira in transactions will be done electronically. In simpler terms, there will be no physical cash involved.
The e-Naira can be accessed through the e-wallet and it is in no way tied to your regular bank. Every transaction carried out on your e-wallet will not reflect on your bank statement except the transfer of naira from your bank to the wallet when funding your account.
Benefits of the e-Naira
The e-Naira has a lot of potential and benefits to offer the Nigerian economy. With the launch of the digital currency, the government can track and monitor the spending of its citizens compared to its counterpart physical note, which is not possible to do as soon as it enters circulation.
The government believes with this new project they will be able to raise the country’s GDP to over $29 billion in the next 10 years. It also believes this project will give Nigeria’s crumbling naira a boost; and will increase the financial position, as well as boost standard of living of the citizens.
More benefits of the new digital currency include proper protection of the naira against devaluation, lowering the conspicuous inflation rate of 16% and suppressing the trading of paper currency in the black market.
What makes the e-Naira different from cryptocurrencies is that the former is issued by the CBN while the latter is issued by other people. Another difference is that the e-Naira is centralised while cryptocurrencies are decentralised. Both types of digital currencies use blockchain technology
What is Blockchain Technology?
The Blockchain can be described as a database or a record book that stores data. As a distributed ledger, it stores transactions that have been validated on a blockchain network. The validated transactions are aggregated and stored in a block; this block is added to previous blocks creating a chain, that is why it is called blockchain.
How to Use the e-Naira?
- Register to create a personal or corporate account using one of your selected banks.
- Fund your wallet.
- Share your QRcode or eNaira account number with anyone who has opened an account on the platform.
- You can begin to either transfer or receive payments.
Important notes on e-Naira
Transactions on the e-Naira platform does not have any direct relationship with your existing bank account, except when you either decide to fund it or move funds from your wallet to your bank account.
This fund moved to your bank account can also be cashed out or used for other kinds of transactions on your banking e-payment platforms.
Some analysts and economists have taken the time and effort to analyse what this new development means to the citizens. As there are two sides to a coin, where there are profits there will always be risks. The first risk of concern is Data Security. The e-Naira operations will be done solely online, which means you would have to input all your personal information on the platform and if you are not vigilant enough, you might fall prey to malicious scammers. In less than two weeks of launching this platform, all sorts of SMS, Ads, and promotions have been sent to people in disguise as e-Naira operatives.
The second risk of concern is the distrust of the citizens against the government. The past actions by the government have left a percentage of the population questioning the credibility of the government.
Amid all the divergent opinions, the government has inevitably taken a huge step into making the country a cashless economy and also combating money laundering and financing terrorism. We can only hope that this project reaches its fullest potential and ticks off all the expected goals.
*Esohe Braimah is an undergraduate student of the Department of Finance, University of Lagos
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