The TRUTH about the e-Naira – Nigeria’s Digital Currency!

The CBN just announced that they’ll be releasing 
some guidelines on the e-Naira aka Nigeria’s   digital currency and in this video, that’s what 
we’ll be discussing. If you’ve been online at all   in any moment and you of course live in Nigeria 
or maybe are Nigerian, well, you definitely would   have seen something about the e-Naira and this 
should concern you…so why is it being launched and   what should you know about it.

This is the video 
to watch. In this video, I’ll explore what the   e-Naira is and is not, what you should know about 
it and what the effects might actually be for you   or every single Nigerian both positive 
effects and negative effects. It is   kind of a big deal. If you’re new to the 
channel, welcome and if you’re returning,   welcome back. I’d love if you could hit that like 
button so more people get to see that value we’re   sharing here in this video. Welcome to another 
Finance Friday video in the series and this   episode is brought to you by VULTe, find out 
how you can be one of 5 people who gets 10,000   cash for free when you watch althrough this 
video. Without further ado, let’s get to it. What is the e-Naira? So first off, what is even the e-Naira? 
And what is the e-Naira not.

The e-Naira   is simply Nigeria’s Digital Currency. It’s 
the Naira but Digital. As simple as that.   It is not a cryptocurrency, but it uses technology 
for Digital Currencies from a company called Bitt   Inc. It is also called a CBDC which means Central 
Bank Digital Currency and countries like China   have one too. Everyone who lives in Nigeria will 
surely have to spend Naira to access basic goods   and services, the same way everyone in the US has 
to spend dollars, the same way British people have   to spend pounds, and Ghanians have to spend Cedis. 
By the way, Ghana is also creating its own Digital   Currency. I didn’t know that until I started 
to research for this video so yeah. The e-Naira   is set to launch in October, the 1st of October 
and that day is also the day of Independence for   Nigeria so it just made sense that they would 
want to do it then.

Or Maybe I’m wrong. But   that would really be interesting to see though? 
What do you guys think? Leave a comment below. Why did Central Bank Propose this? In May, I made a video about the e-Naira or 
Nigeria’s Digital currency, you see, just 2 months   before May or in February of 2021, the CBN stopped 
a major link in cryptocurrency, which is banks. It   had the effect of banning cryptocurrency because 
of course in the multiple circulars, Nigeria did   not regard cryptocurrency as money and they said 
that banks must not touch cryptocurrency or enable   it in any way, shape or form.

Like I said, 2 
months later, the Governor of the Central Bank of   Nigeria, the CBN governor mentioned that Nigeria 
will be considering its own digital currency. At the height of the “crypto ban”, Nigeria 
was like the 2nd in the world with regards to   volume of cryptocurrencies being 
traded on Paxful’s platform,   it showed that the parallel market was and is 
still very strong and present in Nigeria and there   was alot that was putting pressure on the value 
of the Naira currency. Basically one major way   Nigeria earns foreign exchange apart Oil is 
remittances or people sending in Dollars,   pounds and such into Nigeria, with Bitcoin, 
you won’t be able to control who’s sending   what in and out of the country and if 
it took over, it could render financial   institutions somewhat less useful. However, 
I don’t see that happening any time soon   as they definitely have to work hand in hand.

The 
way they currently are now, but we never know. We are also facing a major dilemma on the exchange 
rate front. A lot of the Finance Friday videos   have covered this in depth and at this point, 
we have hit a 530 Naira to $1 all time high.   One of the reasons we couldn’t get a $1.5 Billion 
Dollar loan in Nigeria from the World Bank in June   of 2021 was because of our exchange rate system. 
There are 2 kinds as far as I know, the Fixed and   Floating Exchange rate system.

Nigeria operates 
on a Fixed Exchange rate that also has a parallel   market. What this means is that the fixed 
rate is the official rate, right now it’s 411   and the parallel rate is 530 as at the time of 
making this video. The world bank linked the   loan approval for Nigeria to having a predictable 
exchange management system. In contrast to this,   a floating exchange rate is one that is determined 
by demand and supply and many experts think that   the 530 naira to a dollar is a closer rate than 
411. However, Nigeria would not accept this as it   could be bad for the economy and a devaluation 
just seems like an unfavorable strategy.

This brings us to today, in September, less than 
a month before the e-Naira launch in October,   and Nigeria has started to lay down some 
ground rules. But before we talk about that,   who is even making this e-Naira? 
Did the CBN magically become so   advanced in the art of digital 
money making? Well, not really. Who is making the e-Naira? A company called Bitt, Inc in partnership with 
the Central Bank would be creating this digital   currency, this e-naira. Let’s bring our favorite 
neighbors in, Ghana which is also considering   its e-Cedi, it’s being built by a competitor 
of the guys Building the ones for Nigeria.   I’ll leave a link below if you’re interested 
in that. It’s by a German securities printing   company called G+D. The company building 
ours is from Barbados and they’re Bitt, Inc Who or what is Bitt Inc and why are they the 
ones building Nigeria’s digital currency? Bitt Inc.

Is a fintech company based in Barbados 
that uses blockchain and distributed ledger   technology to enable safe p2p transactions 
with seamless mobile money. Now if all that   sounded like rubbish to you…Basically, their 
main objective is to develop payment systems   for people, companies, banks and central banks 
using blockchain technology as well. The reason   the CBN gave for the selection of Bitt Inc 
was they they were infact selected from   highly competitive bidders, I believe the 
number of bidders were over one hundred but   they claimed to have chosen the company due to 
tested and proven digital currency experience   which is already in circulation in 
several Eastern Caribbean Countries.   They also stated that they were chosen 
because they helped successfully launch   the Central Bank Digital currency for the 
Eastern Caribbean Central Bank in April 2021.

So they have infact minted digital 
currency for a country before. One thing to note is that the company Bitt Inc 
would have to register in Nigeria as a Limited   Liability Company. Basically a business, and the 
Central Bank will infact own a stake, a portion or   shares in their Nigerian company. CBN currently 
does own shares in some of the other companies   managing our financial payment system like 
NIBSS or Nigeria Inter-Bank Settlement System.   I think this helps so they can have a vote in 
how the currency for the Nigerian people is being   managed and one private company would not have the 
upper hand in determining the lives of our people.   Anyway, if you’re liking this video so far, a 
thumbs up would really be amazing as it would help   more people become aware of what we’re sharing 
here. Now, what is the e-Naira process like? What is the e-Naira process? First things first, there will be different 
levels or tiers of wallets and there will be   launch stages.

I’ll talk about these two things in 
a bit but first, how would this happen? Let’s talk   about Stages. In Stage 1, The CBN says it will be 
responsible for issuing, distribution, redemption   and destruction of the e-Naira currency. In the 
second stage, we have the Financial Institution   Suite where licensed financial institutions 
like Banks will be able to request and issue   stable coins.

So yes, the e-Naira will have a 
stable rate and not be able to bear interest like   cryptocurrency. When comparing it to something 
like the dollar for instance, the e-Naira will   equal the prevailing dollar rate at the time, and 
probably not the parallel market rate but that’s a   far stretch when you consider the existence of P2P 
trading. The CBN says that at this seconds stage,   these licensed financial institutions will also 
manage the digital currency across branches, they   will do the KYC or Know Your Customer registration 
and AML or add anti-money laundering compliance. What does this mean for commercial 
banks? Well commercial banks right now   have a large number of products. 
I’ve been able to use many, VULTE Similarly, with an app like VULTe, you 
get to do a lot of these things already   but now, with the e-Naira, it’s more 
like the Government’s super app.

In the 3rd Stage, the Nigerian government 
will become more involved and will process   digital payments sent and received from citizens 
and businesses. At Stage 4, we should expect   Merchants who are expected to provide low-cost 
payment and business management software, POS,   online transaction and reconciliation. 
The 5th and Last Stage would be the Retail   Consumer Suite which will focus on the 
architecture of the digital currency. What about the Wallets now, there’s also 
different levels or tiers of the wallets. Because the deadline is really close, there will 
be an existence of what is called a Speed Wallet.   These wallets are to enable CBN meet their 
October 1st Deadline. They say it’s not a   competition to existing banks but another 
means of transaction until a time where   other banks can plug into the Digital Wallet 
with their own infrastructure or technology.   So what are the different wallet levels? The first tier allows users with no bank account 
to use the Speed Wallet.

However they must submit   a passport, their name, place of birth, gender 
address and phone number. This first tier will   have a daily limit of N50,000 for sending 
and receiving and the minimum requirement   for using a first tier wallet is a phone number 
which will be validated as a National Identity   Number or NIN, so if you haven’t registered 
for your NIN, you might probably want to do so. The second tier or Tier Two wallet 
requires that the users must own an account   with an existing bank. At this level they can 
send and receive 200,000 daily with a cumulative   balance daily of 500,000, aka the total sum 
of transaction you can make in a day would be   500,000.

The minimum or lowest requirement 
is a BVN, or bank verification number. The third tier allows for daily send and receive 
transactions up to 1,000,000 with a cumulative   balance daily of 5,000,000, meaning you can not 
go beyond 5,000,000 for anything else apart from   sending and receiving. The minimum requirement 
is the same as the 2nd tier and that’s your BVN. There’s also a last tier which isn’t referred to 
as the 4th tier but called the Merchant Level.   It allows this user to send and receive 1,000,000 
however, there’s no limit to the amount of money   that can move to their bank accounts. The minimum 
requirements are as the tier 2 and 3 however,   there will be more KYC that is linked 
to the Anti Money Laundering or AML   and Combating Financing of Terrorism or CFT. Advantages So what are the advantages of this? Let’s start 
with the fact that it’s going to be really fast   with regards to payments. It’s also going 
to be very cheap. Cheap for both the CBN and   the users. For the CBN, they 
don’t have to deal with the   logistics of moving paper money up 
and down or printing paper money.   They could cut costs by a third if they minted a 
third of their allocation to digital currencies   and for us the users it could be cheap or maybe 
even have no cost of transfers on some wallets.   Like the First Tier wallet up to the merchant 
wallet basically has no cost at all.

However,   experts have pointed out that the CBN hasn’t 
clearly stated if there would be a charge between   an existing bank account which already charges you 
money and an e-Naira wallet which doesn’t. Does it   mean if I send money from my normal bank account 
to the e-Naira wallet I get charged but when I   send from e-Naira to a normal account I won’t 
get charged? Nothing has been stated for now. Another advantage is that Anti Money Laundering 
(AML) would be baked directly into this system and   because of the robust KYC or Know Your Customer 
level of the BVN, we should be able to hit the   ground running as fast as possible..

Not everyone 
will participate of course, I will, for science   purposes but I’m sure it will not be out of the 
ordinary. It will surely be transparent, I hope. Concerns With regards to the concerns experts 
have. It’s Control. The Director of   Monetary Policy in the CBN says that the 
CBN will have some control in the beginning.   Remember when I said earlier in my first 
video about the Nigerian Digital currency   that the CBN might compete with commercial 
banks or have a centralized power that gives   them authority to do and undo with immediate 
effect. They also mention this in the 3rd stage   as well as I explained earlier in this video. 
It could also phase out big players that have   billions of dollars in investment and payment 
Infrastructure because now, the CBN can even   issue money directly, why would they need them? 
However, it might also not be the case as these   companies might help with distribution but still 
if it catches on, there would definitely be a   mass effect and it could disrupt many big 
companies or some banks at the worst case.

The other thing is Data Protection. The 
information of tens of millions of Nigerians will   be in the hands of the government and shared by a 
single private firm. However, the CBN has a stake   and they definitely will have deciding power over 
the sharing of these details and with the obvious   advancement of technology, I hope we can’t 
get identities compromised or worse stolen. One of the many reasons mentioned was Financial 
Disintegration. Financial Integration is simply   the linkage or how close our economy is 
to the world’s economy, or economies of   neighboring or regional countries, for us 
it’s how we measure up against our African   countries… According to one of the CBN directors, 
Nigeria is quite financially disintegrated.   Financial Integration is measured by capital 
inflows, stocks of assets and liabilities,   interest rates and how financially open an 
economy is. We are unfortunately not there   yet and the implementation of the e-Naira, if not 
done right can probably widen the inequality gap   not just relatively and also slow down the rate 
of getting more citizens financially included. I also have my own personal concerns or concern?.   Please at least make the user interface 
beautiful because if it’s not.

If it’s not.. Haha, well that’s all I have 
for now. Thank you for watching,   make sure to like this video if you 
found it useful, also leave a comment   letting me know your thoughts and letting 
me know if you have downloaded VULTe,   winners will be credited into their VULTe 
accounts when they download and it’s verified   users only that get them. Alright, thank you 
for watching! I’ll talk to you in the next one..

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