Nigeria Drafts Steps For Regulated CBDC, Digital Naira

The Central Bank of Nigeria has issued a guideline showing the operational framework of Nigeria’s digital Naira.

Nigeria On Track To Launch Its CBDC

The Central Bank of Nigeria (CBN) has released details of the initial regulations for the country’s planned Central Bank Digital Currency (CBDC), the e-Naira. 

As stated in an August 30th post by a Nigerian tabloid, Nairametrics, the regulations were outlined in a document which the apex bank circulated to Nigeria’s commercial banks. 

The document reveals the five major stakeholders that will anchor the operation of the e-Naira:

The Central Bank: the sole right to mint or destroy the e-Naira digital currency will be vested with the CBN. The CBN will also be the watchdog for Nigeria’s CBDC, tracking and analyzing transactions. 

Licensed Financial Institutions such as Commercial banks: these institutions will integrate e-Naira into core banking operations. They will also ensure that users comply with appropriate know-your-customer (KYC) procedures to discourage using e-Naira for money laundering.

Government: the Government will be in charge of the architecture responsible for the efficient processing of digital payments.

Merchants: At this level, merchants and businesses will provide and facilitate low-cost payment services such as point-of-sale (POS) and online payments.

Consumers: here are the users of the e-Naira for the exchange of goods and services. The customer interface will be designed to be user-friendly. This layer will have features that ensure the optimal privacy and safety of users and their assets. 


What Will Be The Features Of The E-Naira?

The digital Naira will have these design attributes:

Will be legal tender for all financial settlements, just like the fiat Naira

1 unit of the e-Naira will have the same value as 1 fiat Naira

Consumer wallets will be graded into tiers with varying levels of KYC requirements. Each tier will have an equivalent daily transaction limit

The digital Naira will be non-interest bearing.

When Will The E-Naira Be Launched?

The development of the e-Naira was conceived in June 2021. According to the roadmap, the project has four phases. The project is currently in the 4th and final phase. 

The e-Naira is on schedule to be launched on the anniversary of Nigeria’s independence day, October 1.


How Do Nigerians Perceive The E-Naira? 

Early in 2021, Nigeria’s Central Bank clamped down on cryptocurrency trading in the country. In its directive, the CBN mandated banks to refrain from conducting crypto-related transactions. The banks were also told to close the accounts of individuals and companies involved in crypto trading. 

Nigeria has a high volume of trade in crypto, and many individuals and Nigerian fintech companies were adversely affected by CBN’s directive.

A search on Twitter using the term ‘e-Naira’ suggests that the CBN’s announcement of the impending launch of the e-Naira has been met with primarily cold feelings from crypto-savvy Nigerians. Apathy was the general mood at the time of writing among most comments. 

Some Nigerians wondered why the regulator prohibited crypto only to introduce it in another form: “The same CBN that banned Cryptocurrency has now introduced e-Naira,” read one tweet

Another Twitter user put it sarcastically:

“So that one day, they will ban it and seize our money. No thanks.”

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