A week after the Central Bank of Nigeria (CBN) issued the e-Naira, it would seem far more questions, on its operability, have been raised. This has downed the materials and other statements released by the CBN and other financial services providers.
Worries abound about overselling the digital currency, considering the vast range of financial instruments that already exist on the digital platform that Nigerians have come to embrace. But issues still remain to tackle.
Chief among these are claims of potential increases in foreign remittances, a boost in cross-border trade, and a deepening of financial inclusion, including a progressive easing of welfare payments, to those in dire need, by the government.
Are these, in fact, realistic expectations? Or merely the stuff of marketing communications? The market will soon find out. That the e-Naira platform briefly went under, shortly after it was launched, did not do much to clear the fog. That stoked further questions.
But all of these are perhaps expected where inadequate best defines the state of supportive infrastructure. Nigeria is among the first countries in the world — it is the very first in Africa — to introduce a digital currency. That in itself is a challenge, especially in the Nigerian environment, which could be Herculean. Which is why we must still commend the apex bank for bracing up to the odds and for showing exemplary leadership.
Still, all of the nagging questions coalesce into a basic one: does the e-Naira have a place in the financial architecture at this time? The answer, in a global financial system where innovation not only rules but where fintech has since become the key driver of its ecosystem, would seem obvious. It certainly does.
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The CBN appeared to have settled that question way back in February when it issued the directive prohibiting banks and other financial players from engaging in transactions in cryptocurrencies. The CBN went as far as directing banks to identify accounts trading in cryptocurrency and to close them down.
Its rationale was simple, even if many had considered it a bit drastic: it had neither the instrument let alone the capacity to regulate cryptocurrencies, many of which activities have begun to seep into the mainstream financial services sector.
That reality came with grave a challenge to the CBN’s regulatory powers and overall effectiveness. Aside from being the darling of shadowy investors and speculators, cryptocurrencies are not under any form of regulation and so are open to all manners of illicit financial transactions. As with any investment, it carries a market risk as the value can fluctuate at any time. All of these, the CBN had rightly reasoned, were things that the financial services sector as indeed the larger economy could ill-afford.
Yet, the block chain technology that births e-currencies is so pervasive. It drives the global financial architecture, as well as the domestic economy. That the CBN cannot ignore such developments makes launching the e-Naira inevitable.
We, therefore, welcome the e-Naira. Though an important addition to existing transactional channels, it is nevertheless one among many. As CBN’s answer to the challenge of cryptocurrencies, Nigeria cannot wait to see it deliver on its promise of speedy, safe, and simple trading and transactional opportunities to customers and end-users.
In the end, the e-Naira’s worth will be measured by how much growth it brings the nation’s economy.