E-Naira Launched, Free for 90 Days, as Buhari Claims GDP will Grow by $29b
Nigeria central bank digital currency (CBDC), the eNaira, has gone live after an official launch by President Muhammadu Buhari on Monday.
Buhari launched the eNaira at the State House in Nigeria’s capital Abuja after a previous plan to unveil the digital currency on October 1 was put on hold.
“We have become the first country in Africa and one of the first in the world to introduce a digital currency to our citizens,” Buhari said at the official launch.
Nigeria is one of the five countries in the world to develop an official digital currency. 14 other countries are at the pilot stages of launching theirs, according to the Atlantic Council’s CBDC tracker.
The Central Bank of Nigeria (CBN) engaged a Barbados-based digital financial technology firm, Bitt Inc, as a technical partner to develop the e-Naira.
With operations spreading across the Caribbean, Bitt utilises blockchain and distributed ledger technology to facilitate peer-to-peer (P2P) transactions with mobile money across a suite of Bitt’s Software and mobile applications.
Nigeria has so far launched two mobile applications – eNaira speed wallet and eNaira merchant wallet – on Google playstore and Apple store for the usage of digital currency.
CBN said the guidelines on how to navigate the applications “seeks to provide simplicity in the operation of eNaira, encourage general acceptability and use, promote low cost of transactions, drive financial inclusion while minimizing inherent risks of disintermediation of any negative impact on the financial system.”
CBN governor Godwin Emefiele in August listed the benefits of the e-Naira to include increased cross-border trade and accelerated financial inclusion.
At the launch on Monday, Emefiele, said 500 million eNaira ($1.21 million) has already been minted.
‘GDP to grow by $29b with e-Naira’
The e-Naira launched Monday has the potential to grow the nation’s Gross Domestic Product (GDP) by $29 billion in 10 years.
President Muhammadu Buhari, who inaugurated the Central Bank Digital Currency (CBDC) in Abuja, said in addition to growing the GDP, the e-naira would enable the government to directly assist Nigerians in need of social cushion.
The eNaira and Naira have the same value and will always be exchanged at 1 naira to 1 eNaira, CBN said.
The President noted that alongside digital innovations, eNaira can foster economic growth through better economic activities, increase remittances, improve financial inclusion and make monetary policy more effective.
With the coming of the new digital currency, the President stated that Nigeria has become the first country in Africa, and one of the first in the world, to introduce a digital currency to her citizens.
His words: ‘’Let me note that aside from the global trend to create digital currencies, we believe that there are Nigeria-specific benefits that cut across different sectors of, and concerns of the economy.
“The use of CBDCs can also help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country.
“Some estimates indicate that the adoption of CBDC and its underlying technology, called blockchain, can increase Nigeria’s GDP by $29 billion over the next 10 years.”
Free 90 Days Transactions
The Central Bank of Nigeria has said that all transactions conducted on the newly launched digital currency platform, eNaira will be free for 90 days.
The bank, however, stated that it will revert to its guide on applicable charges by banks and other financial and non-financial institutions at the end of the stated period.
The apex bank disclosed this in the framework titled, ‘eNaira Circular and Guidelines’ released on Monday.’
The news is coming after President Muhammadu Buhari launched the currency in Abuja on Monday.
The CBN said, “The charges for transactions that originate from the eNaira platform shall be free for the first 90 days commencing from October 25, 2021, and then revert to applicable charges as outlined in the Guide to Charges by Banks, Other Financial and Non-bank Financial Institutions.”
The apex bank noted that Electronic Funds Transfer below N5,000 is charged N10; N5,001 – N50,000 is charged N25 and for above N50,000, a N50 charge is associated.
The bank also said phone numbers without verified National Identification Number (Tier 0) will have a daily transaction limit of N20,000, while the maximum that the account can hold is N120,000.
For phone numbers with verified NIN or Tier 1, CBN said they have a daily transaction cap of N50,000 and a maximum balance of N300,000.
Tier Two accounts will have access to a daily transaction of N200,000, while N500,000 is the maximum balance that can be held.
The Tier 3 account holder can transact a maximum of N1m daily, while the Maximum balance it can hold is N5m.
However, the CBN noted that merchant accounts have access to unlimited transactions.
According to the Bank, merchants are duly accredited individuals and non-individual (corporates) authorized to conduct business in Nigeria.
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