What is enaira?
Enaira is a digital version of the Nigerian naira issued by the nation’s central bank on Monday, 25th October, 2021. The launch was headlined by Nigeria’s President Muhammadu Buhari, and the CBN governor Godwin Emiefiele.
If you are reading this possibilities are that you are a Nigerian business owner or individual looking to grow better. So how does the enaira improve or affect your chances? Let’s see.
What is enaira? 5 Things Nigerian Businesses Should Know.
The presence of the enaira means more payments can be made without cash. Yes, this is already possible. Views from yesterday’s launch reveal the digital currency will function as a legal tender. This means you will need to fund your enaira wallet to use it. Provisions are already in place for users to transact via the enaira portal, app, and QR codes. You can buy enaira or fund your enaira wallet via the portal or app and also through verified vendors & agents like your banks can help.
2. Same Value as the Naira
Of course, there are many expectations concerning the value of the naira. However, the enaira is not supposed to act as a magic wand. Unlike what many tech-savvy people may be expecting, enaira is not another currency. It is a digital version of the naira which can travel faster. It is issued directly from the CBN. According to reports, 500 million naira worth of enaira has been minted. And accessing it is also like creating a new account. You will need to provide details like your Bank Verification Number, National Identification Number, or KYC (Know Your Customer Details) to create an account, begin transactions and unlock the various transaction limits attached to the platform’s tier (level) account system.
3. enaira Uses Blockchain but still not Crypto…
Like cryptocurrency, it utilizes blockchain technology to layer transaction encryption and tokenization. But it is not a coin or cryptocurrency or a tradable currency you can trade to yield interest. So far, its use has been circled around faster transactions backed by the CBN. In February 2021, the CBN placed stiff restrictions on cryptocurrency transactions within the country.
In that period, the CBN governor, Godwin Emefiele, called cryptocurrencies, currencies made out of thin air. Hence the apex bank has remained insistent on not authorizing cryptocurrency transactions in the Nigerian financial systems. This ban on cryptocurrency has remained that way since February 2021.
So do not expect the enaira to be that kind of money.
4. It’s a CBN thing, not your bank
Because it is issued as a digital currency by the CBN, the enaira will not come directly from banks. It is a liability directly on the CBN. This means you will have an account with the CBN and they will be responsible for your account. This is unlike the money which is in your bank. Banks are liable for those deposits. In enaira, the CBN is in charge and holds your account. Banks and other vendors will only help in facilitating naira-enaira, enaira-enaira transactions by making it an accessible option on their channels.
5. Enaira will be minted too
Yes, it will be minted. Minting is the process where central banks produce money as legal tender for a nation. You know the CBN has to treat anything “naira” as sacred to preserve its value. So the enaira will also undergo the procedures and even regulations that define the naira. Just as the physical version, banks themselves will need to queue to access it. N500 million enaira has been minted already for this purpose and about N200 million has been disbursed to financial institutions. 33 banks have been reportedly onboarded on the digital platform alongside customers and vendors.
So what do we think?
We think the world’s central banks are beginning to see why people are so excited about blockchain technology that drives cryptocurrency. Blockchain is affordable, fast, & efficient. Nigeria’s CBN is not exempted, especially following the discovery that people have evolved a strange way of receiving and making payments (cryptocurrency via blockchain) without going through their banks. That might be dangerous for the banking system.
Perhaps, enaira is a way to get into the picture and bring in more people including those running to cryptocurrencies back into the banking system. Plus, the government can generate a big financial database it can use for other fiscal and administrative purposes from the enaira platform. But can the enaira really dissuade cryptocurrency users? Cryptocurrency systems have no central regulators like the CBN. What will it take to convince Nigerian crytpo users to switch since many keep crypto for its trading value?
Again, news portals have reported impressive traffic of over one million visits on the enaira platform. Yet, we tend to ask, are there plans to ensure these visitors really convert into users? Are there discussions with digital transactions stakeholders like fintech, e-commerce, and content distribution platforms to promote usage?
What’s in it for me?
We think the enaira provides yet another channel to send and receive payments from your customers and audiences. If they cannot pay cash, business owners can offer enaira as an alternative. Because of the newness of every digital idea in Nigeria we do not recommend compelling customers to use it. It functions just like the naira in their banks too.
Rather, we encourage business owners and individuals to spend time educating their customers and audiences on the enaira and the future of naira transactions in Nigeria.
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At Persuasion network we do more than helping Nigerian businesses attract customers online. We believe that every Nigerian business should have all the support services and tools they need to grow their businesses fast, empower their staff and make impact! their environment.
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