Banking Law

The Prospects Of The E-Naira Digital Currency

In line with its authority outlined in Section 19 of the CBN Act 2007, the Central Bank of Nigeria (CBN) recently issued a digital currency called the E-naira. This Central Bank Digital Currency (CBDC) launched on the 25th of October, 2021 still appears to be an obscure concept to many Nigerians. It is worthy of note to state that the E- Naira is a legal tender with the same value as the Naira.

This means one Naira is equivalent to one E-naira. Going by the introduction of the tender given the CBN, it is designed to be a measure of exchange and store of value. The currency aims to offer easy access to capital and financial services by providing media for speedy transactions. An advantage the E-naira is said to pose is that it can be remitted in diaspora and it can be traced. This means that it would not be easily used to facilitate fraudulent activities.

The notable advantages which the E-naira is created to possess are that, first of all, it provides financial inclusion services. This strives to make financial services available to persons who do not have access to banking opportunities. And as easier mentioned, it provides a means to enjoy cheaper, safer, and quicker banking and commercial transactions.

Secondly, the E-Naira has a unique identity structure. This simply means no two coins are the same, this goes on to emphasize that it cannot be forged or counterfeited. With reduced cash handling of funds, users can still continue to conduct their daily businesses with the E-Naira without concern of fake or counterfeited notes.

Thirdly, it provides a platform for unified payments which allows for customers to transfer money from their bank accounts to their E-Naira wallets and vice-versa.

Another notable features of the E-Naira are that it does not yield any interest. Unlike the Naira notes which ordinarily yields interest after a while upon investment, with the E-Naira, that is not the case. It also provides a means of account management by an individual or merchant account holders. One can have access to their account and the information of their transactions for their personal management. As a welcome development, the E-Naira operates a means of contactless payments vide the use of QR Codes.

Asides from Nigeria, other countries have also explored and are still exploring the options of CBDC which in turn will help facilitate cross-border transactions and aid business growth in return. Unlike other forms of digital currencies such as cryptocurrencies, the E-Naira is not privately controlled but backed by established authorities. Its fluctuation rate is the same as the Naira and will not the affected separately by market influences. In terms of its circulation, the CBN is providing the E-Naira to intermediaries who would then supply to individuals/customers who are required to maintain a treasury wallet.

Irrespective of all these positive attributes the E-Naira is stated to possess, its introduction has been faced with a lot of mixed reactions from Nigerians. With a very low turnout of accounts created upon its launch last month, the app is no longer available for download. Still unsure as to the impact of recent events on the E-Naira currency, Nigerians are waiting to receive updates from the Central Bank, all of which will shape the future of the E-Naira in our business world today.


About Udolisa, Sophia Chinazo

UDOLISA, Sophia Chinazo, a Graduate of the University of Uyo is a Nigerian Writer/Lawyer/Content Creator. She is currently an Associate at Opal Law Office and a member of the Chartered Institute of Conciliators and Mediators. Her areas of interest are in Alternative Dispute Resolution, Commercial/Corporate Practice, Labour, and Fintech. She is passionate about creating awareness on legal issues and questions that people may have thus her drive in creating content for that purpose".