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More Details Emerge About How CBN’s E-Naira Would Affect Nigerians

The Central bank (CBN) has taken actions against crypto transactions, but embraced the fourth industrial revolution as Nigerian Central Bank Digital Currencies (CBDC), “e-Naira”, is set to launch in October. In light of this, here is what you should know about Nigeria’s CBDC and how it affects you.

The Pub;lisher Nigeria gatyhered that the Monetary Policy Committee (MPC) meeting on Tuesday, July 27th, 2021, Nigeria’s central bank governor, Godwin Emefiele, confirmed the CBDC debut date for October 2021. Since 2017, the CBN has been researching CBDC alongside over 80% of central banks, with only the Bahamas, the Eastern Caribbean, and China having implemented it in practice.

Central Bank Digital Currencies is supported by law and is normally used as legal money, it is also considered the central bank’s direct liability. The CBDC would be divided into two categories: retail and wholesale. A ‘retail’ CBDC would be used as a digital extension of currency by all persons and businesses, whilst a ‘wholesale’ CBDC may only be utilized as a settlement asset in the interbank market by permitted institutions.

According to sources, the live implementation of the CBDC dubbed “e-Naira” will be the result of the research, “Project Giant.” Macroeconomic Management and Growth, Cross-Border Trade Facilitation, Financial Inclusion, Monetary Policy Effectiveness, Improved Payments Efficiency, Revenue and Tax Collection, Remittances Improvement, and Targeted Social Interventions are the main goals of the project.


Recall that Nigeria’s central bank banned and reminded players in the Nigerian financial ecosystem against conducting any crypto transactions or facilitating payments for crypto exchanges in a circular dated 5th February 2021 and circulated to Nigerian-based financial institutions.

Furthermore, the CBN urged financial institutions to close the accounts of any individual or companies engaging in or operating cryptocurrency exchanges immediately.

To support such a decision, the apex bank has previously released a statement claiming that digital assets generated by unregulated and unregistered firms raise legal concerns.

Crypto assets, according to the CBN, have also been used to support a variety of illicit activities, including money laundering and terrorism. Hence, the e-Naira is a step in the direction of satisfying people demands for a digital currency in this technology-driven age.

What is the difference between CBDC and Cryptocurrency?

The technology is the most significant difference between CBDC and Cryptocurrency. Cryptocurrency transactions can be made using decentralized “blockchain” technology. With the CBN as the main controller, the CBDC has a central network topology.

Furthermore, cryptocurrency is not recognized as a legal tender in Nigeria, but the CBDC will be recognized as a CBN-backed legal tender. CBDC is the Central Bank’s direct liability, but cryptocurrency is not the Central Bank’s or any of its regulated institutions’ liabilities.

How the CBN intends to deploy CBDC

According to sources, the first phase is to assess and socialize, which includes defining goals. The design of the CBDC is the next step, which entails the technological infrastructure needed to supply and manage the digital currency. The next step is to undertake a feasibility and viability analysis using a proof of concept. The CBN would take steps to educate and inform about the rollout of CDBCs. Finally, the apex bank would ensure that CBDC is fully implemented across the country.

Comparing retail and wholesale CBDC

A ‘retail’ CBDC is a digital extension of cash and used by all people and companies, while a ‘wholesale’ CBDC is used only by permitted institutions as a settlement asset in the interbank market. Here are some key takeaways.

  • Retail CBDC is used in the same manner as banknotes to make retail payments: P2P and B2P. while, Wholesale CBDC is used to enable transactions between financial institutions, central banks and entities holding accounts with central banks.
  • Retail CBDC is more suitable for central banks in emerging economies compared to that of wholesale CDBC which is more suited for advanced economics.
  • Retail CBDC is focused on lowering the barriers to financial inclusion but may limit the financial intermediation role currently played by banks. Wholesale could prevent some of the more disruptive impacts of CBDC on the financial sector but may limit efficiency gains and broad access to CBDC relative to a retail model.
  • Retail CBDC is meant for the general public and average consumers conducting daily transactions. Wholesale CBDC is more suitable for exchanging and trading among central banks and private banks.

How you can get the e-Naira

The e-Naira CBDC lifecycle involves a 4-step process to full implementation and adoption of which the second stage ends with you having a portion to transact with;

  • Issue CBDC; The apex bank would design, create and store CBDC.
  • Distribution of CBDC; CBN distributes CBDC to financial institutions and licensed service providers. After which financial institutions and licensed service providers provide CBDC to individuals and businesses.
  • Transaction with CBDC; The transaction can either be offline or online. An online transaction can be made when individuals and businesses transfer value in real-time via existing and future payment channels. Also, individuals can transfer value in real-time while offline to other individuals and businesses.
  • Monitor and Maintain CBDC; CBN can reconcile issued CBDC. Also, CBN can withdraw and issue new CBDC with modernized technical and security attributes.

What e-Naira means for the Nigerian economy, government, and other stakeholders

  • The CBDC has the potential to reduce cash handling costs by 5-7%, deepening digital financial inclusion and promote the development of e-commerce.
  • e-Naira would promote formal cross-border payments for efficiency, convenience and affordability.
  • e-Naira would create a reliable mechanism to distribute fiscal stimulus to citizens, this is highly vital due to the activities seen during the distribution of COVID-19 palliatives.
  • The project would reduce tax leakages due to tax evasion and illicit money flows, also, it promotes and supports the implementation of government objectives.
  • Nigerians would experience a reduction in the overall indirect cost of cash on the broader community and reduce inefficiencies from dealing with physical cash.
  • It creates Innovation opportunities in the financial system as new business opportunities arise from emerging business models, financial products and services.
  • A two-tiered model for CBDC will enable Public-Private Partnership wherein the CBN designs an e-Naira and distributes it technology-driven through Regulated Financial Institutions.
  • e-Naira creates an opportunity to unlocks new revenue and growth opportunities thereby generating a sustainable value pool by unlocking new market segments