Nigeria is in communication with new possible technology partners to develop a better system for operating and managing its Central Bank’s Digital Currency (CBDC), known as eNaira.
This development was disclosed by a media company report, Bloomberg’s this week.
The Central Bank of Nigeria (CBN) created the eNaira in collaboration with Bitt Inc., a financial technology startup that provides digital currency solutions to central banks and financial institutions in the United States. Nigeria became the first African country to implement a CBDC when it went into effect in October 2021.
According to the study, the issue is not with the technology’s operation but with who owns it. It states that CBN wants to develop its own software for digital money so that it may maintain complete control of the initiative, and they have discussed ideas for the development of new proprietary technology with R3, a worldwide enterprise technology and services corporation headquartered in New York.
The eNaira rollout was planned in three phases, according to Bitt’s website, and they are currently in phase two, which involves “onboarding banked customers and merchants, as well as integrating and optimizing core banking systems to facilitate transactions throughout the existing eNaira ecosystem.” Integrations with the National Payment Service for QR functionality and wholesale money transfer, text-messaging connectivity with the CBN’s SMS gateway service, and security reinforcement are other aims for this phase.
Read also: CBN Records 700,000 transactions worth N8 billion on eNaira
The third phase would feature the integration of a Nigerian trade and exchange platform, the distribution of sector-specific tokens for grants and subsidies, and the introduction of programmable eNaira payments for various payment situations.
According to the sources, the new technology partner, whether R3 or another company, would not be expected to take Bitt’s role immediately but would instead collaborate with CBN to achieve their long-term goal of “controlling the underlying technology.”
The eNaira’s implementation is not progressing as planned about a year and a half after its inception, with barely 0.5% of Nigeria’s 217 million inhabitants using the CBDC. The public’s slow adoption of the eNaira caused the central bank to impose withdrawal limitations on the amount of cash residents can withdraw from their bank accounts in an effort to push its “cash-less Nigeria” goal and increase eNaira use.
Introduction Of New Naira Notes
Under the new legislation, which went into effect on January 9, citizens can only withdraw a maximum of 20,000 naira (about $43.50) from cash machines every day, with a weekly limit of 100,000 naira (approximately $217). In order to combat inflation and money laundering, the CBN also released new naira banknotes.
Originally, Nigerians had until January 24 to exchange their old, higher denomination bank notes for the new currency, but due to distribution issues, the CBN announced that the deadline for exchanging old naira currency notes would be extended by 10 days to “allow more of those in rural communities to exchange the old notes,” according to CBN Governor Godwin Emefiele.
Nigerians had until February 10 to return 1,000, 500, and 200 naira bills. Naira holders would have a further seven days after that date to deposit old notes directly with the CBN. Any old bills still in circulation as of February 17 are null and void.
Nigeria’s populace is thought to be the most crypto-savvy on the African continent, with the country ranking first in Africa for crypto adoption and eleventh internationally. In 2022, moreover, a third (35%) of the Nigerian population aged 18 to 60 reported owning or trading cryptos.
The recent depreciation of the national currency, combined with restrictions on the amount of cash citizens can withdraw from ATMs, has led to a surge in demand for Bitcoin (BTC). Earlier this month, the price of one Bitcoin was 17.5 million NGN, or $38,010, on the Nigerian crypto exchange NairaEX. This amounts to a 64% premium over the market price of Bitcoin.
Nigeria is also developing new restrictions for non-governmental cryptocurrency. On December 18, Nigeria’s Chairman of the Committee on Capital Markets and Institutions, Babangida Ibrahim, stated that the country’s House of Representatives is aiming to approve new legislation that will allow cryptocurrencies to be used in a variety of ways in Africa’s largest economy.
The Investments and Securities Act, 2007 (Amendment) Bill, if passed and signed into law, will allow Nigeria’s Securities and Exchange Commission to recognize cryptocurrencies and other digital assets as “capital for investment,” as well as define the regulatory roles of the SEC and the Central Bank of Nigeria (CBN) in relation to crypto.