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Africa’s first digital currency launched

The eNaira, Africa’s first digital currency, was issued on Monday after missing its original 1 October 2021 launch date, said the Central Bank of Nigeria (CBN). The launch comes after Nigeria imposed a ban in early February on banks dealing in or facilitating cryptocurrency transactions.

A press release signed by Osita Nwanisobi, Director, Corporate Communications CBN, confirmed that the eNaira would be unveiled formally by Nigeria’s President Muhammadu Buhari at the State House in Abuja. It added that the launch marks the first step of the eNaira journey, which will continue with a series of “further modifications, capabilities and enhancements to the platforms.”

eNaira’s benefits

The CBN press release was accompanied by a design paper outlining the design and benefits of the eNaira and how the currency will work, including the possibility of direct welfare disbursement to Nigerian
citizens. 

Noting that the Covid-19 pandemic has revealed weaknesses in distribution, the paper states that the eNaira will provide “a clear means for the government to send direct payments to citizens eligible for specific welfare programs.”

Easier cross-border transactions will be a further benefit, as the eNaira “gives Nigeria the ability to transact separately, thereby reducing the demand for correspondent banking services and SWIFT international financial messaging and payment systems for the clearing and settlement of trade.”

This will be possible thanks to the eNaira’s interoperability, one of the design elements mentioned in the design paper, so that it can work with central bank digital currencies (CBDCs) from other countries although at present that usefulness is limited as only five other countries – The Bahamas, Saint Kitts and Nevis,
Antigua and Barbuda, Saint Lucia and Grenada – have fully launched a CBDC

In terms of data and privacy protection, the paper says users can determine how their data is used and shared, although the currency is designed to comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) guidelines.

According to a Reuters report, Nigeria has chosen Barbados-based digital asset exchange Bitt Inc as a
technical partner to develop the eNaira.

Widespread accessibility

The CBN’s governor, Godwin Emefiele said the eNaira will operate as a wallet, allowing customers to store existing funds in their accounts. “The eNaira therefore marks a major step forward in the evolution of money, and the CBN is committed in ensuring that the eNaira, like the physical Naira, is accessible by
everyone.”

He added that Nigeria would be “the first country in Africa” to roll out a digital currency, which would help facilitate trade, as Nigeria is Africa’s largest economy and would be able to “set the tone” to tell Africa they were ready to lead.

News reports stated that the CBN’s eNaira site got over a million hits in the first 24 hours after going live.

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