The Central Bank of Nigeria (CBN) plans to expand the use of its digital currency, eNaira, to facilitate payments into government accounts and allow Ministries, Departments, and Agencies (MDAs) to initiate vendor and beneficiary payments.
This is according to the CBN’s newly released Monetary, Credit, Foreign Trade, and Exchange Policy Guidelines for Fiscal Years 2024-2025 document.
According to the document, “the CBN shall continue to work towards enabling the use of eNaira Wallet/Channels by payers to pay into government accounts at the CBN, and, allow Ministries, Departments and Agencies (MDAs) to initiate vendor/beneficiary payments from their respective eNaira Wallets.”
This development is part of the CBN’s continued efforts to enhance the adoption of the eNaira in both public and private sectors.
CBN to deploy eNaira version 2.0
In addition to facilitating payments, the CBN’s guidelines detail other enhancements for the eNaira. These include collaboration with both federal and state governments to drive adoption, as well as the deployment of eNaira version 2.0, which focuses on expanding the role of deposit money banks in its usage.
Other planned features include offline functionality and programmable money, which will further integrate the eNaira into both online and offline government activities.
The document noted: “The CBN issues and regulates the eNaira, a digital form of the fiat currency. The eNaira offers several benefits which includes faster and cheaper payments, increased financial inclusion, and reduced fraud, amongst others.
“The CBN shall sustain efforts in enhancing the eNaira and driving its adoption. This includes the deployment of eNaira version 2.0 with focus on wholesale Central Bank Digital Currency (CBDC) to increase the participation of deposit money banks and empower them to drive its adoption; implementation of offline functionality, programmable money; and more collaboration with Federal and State Governments to increase its adoption.”
What you should know
Nigeria’s Central Bank Digital Currency, eNaira, was launched in October 2021 as one of the country’s initiatives to drive financial inclusion. The digital version of the naira is expected to boost the cashless policy of the CBN.
Nigeria has been listed as one of the top 3 countries in the world where Central Bank Digital Currency (CBDC) has gained momentum as 44 other countries are starting their pilot phase.
Nairametrics earlier reported that Nigeria’s Central Bank Digital Currency (CBDC), eNaira, makes up less than 1% of the total currency in circulation as of March 2024, almost three years after it was launched.
According to data from the quarterly statistical bulletin of the Central Bank of Nigeria (CBN) for the first quarter of 2024, out of N3.87 trillion currency in circulation by March 2024, e-naira made up N13.98 billion.
This means that about 0.36% of currency in circulation in the country is in the CBDC, eNaira.
The CBN partnered with several banks, fintech companies and merchants to enable the adoption and usage of the eNaira.
It also implemented various incentives and regulations to encourage the uptake of eNaira.
For instance, the CBN waived transaction fees for eNaira users until 2023 and has set a minimum capital requirement of N50 million for eNaira service providers.
The apex bank also issued guidelines on the anti-money laundering and counter-terrorism financing (AML/CFT) measures for the eNaira ecosystem.
Meanwhile, the central bank introduced the use of its digital currency as a payment option to recipients of diaspora remittances.
Although it is the world’s second CBDC to be launched, the eNaira has struggled with adoption over the years.
The International Monetary Fund (IMF) scored the eNaira low on adoption citing slow growth in eNaira wallet downloads among retail users.