eNaira: Definition, Benefits and Guidelines

The eNaira is a digital version of the Naira that also acts as legal tender issued by the Nigerian Central Bank (CBN). By having the exact exchange value as the Naira and retaining parity of value with Naira, the tender intends to support Naira, although virtually.

Furthermore, eNaira is based on blockchain open ledger technology, which prevents duplication and the manufacturing of fraudulent eNaira notes because each eNaira note is unique. It’s Nigeria’s remake of a Central Bank Digital Currency, which are digital currencies developed and authorized by central banks across the globe.

eNaira was formally launched on October 25, 2021, after an earlier deferral on October 1, 2021.


What distinguishes eNaira from cryptocurrency? Is eNaira a Cryptocurrency?

No, eNaira is not a cryptocurrency. Unlike Bitcoin and other cryptocurrencies, the eNaira is a government-issued digital money that serves as legal tender in the same way as the Naira does. This means that instead of going to a commercial bank, consumers can get their money straight from the CBN. It is also tied to the physical Naira, thus its value will not vary at a separate rate than the Naira owing to market influences.

Because its value is tied to the physical Naira and eNaira does not pay interest, it cannot be used for wealth accumulation or investment like other cryptocurrencies.

The eNaira essentially provides digital stability by making it simpler to conduct digital transactions without the use of real cash. It also prohibits commercial banks from acting as intermediates in eNaira transactions, with the exception of eNaira Wallets.

Read: What Is The Highest Currency In The World?


How will the eNaira work?

eNaira will only be available through eNaira Wallets, which are digital wallets that store the eNaira. In order to utilise eNaira, you must have the eNaira Wallet, which is maintained and controlled on the distributed ledger.

Currently, the CBN will supply eNaira to intermediaries (licenced financial institutions) for onward distribution to individuals (from their Stock Wallet). As a result, these financial institutions will keep a treasury wallet in order to receive eNaira from the CBN. ID authentication, eNaira payment processing, and the development of wallets for consumers to hold their eNaira will be overseen by financial institutions authorised by the CBN. Customers can use the eNaira app to find a bank of their choice, link to their bank accounts, and conduct transactions.

The CBN has set out in the eNaira white paper, a tiered form for KYC operations as stated below:

Tiers of Customer Minimum Registration Requirements Account Balance Maximum Daily Transactions Limit
Tier 1 (Non-Bank Account Holders) Telephone number (awaiting NIN verification) N20,000 N120,000
Tier 2 (Non-Bank Account Holders) Telephone number (NIN verified) N50,000 N300,000
Tier 3 (Customers with an existing Bank account) Bank verification number (BVN) N200,000 N500,000
Tier 4 (Customers with an existing bank account) Bank verification number (BVN) N500,000 N5,000,000
Merchants and Businesses Full KYC requirements (including BVN, TIN and Bank confirmation) and compliance with the anti-money laundering and counterfeit terrorism regulations of the CBN Unlimited No Limit (with auto sweep trigger)

Benefits of eNaira

As stated above, there are various stated benefits that consumers can obtain from using eWallet. For starters, there is no need for a third party in transactions, which might save time and money. This means that instead of dealing with money administered by a bank, users hold eNaira in their eNaira Wallets, which is similar to having digital cash. The removal of intermediaries is projected to cut transaction time and expense, as well as make cross-border transactions easier.

Furthermore, when compared to commercial e – banking, the introduction of eNaira would save customers money because daily transactions between accounts will be free of charge to the account holder. This will enable traders and individuals who deal in trade to operate at a cost-effective rate on a regular basis.

Other advantages of the eNaira include increased financial inclusion of underserved individuals, easier access to tailored social services for Nigerians, and a decrease in fraud cases and illicit financial activities such as tax evasion thanks to the eNaira’s unique ID.


In what ways will the eNaira launch have an impact on the public?

Individuals, homes, enterprises, non-governmental organisations (NGOs), religious institutions, Nigerians in diaspora, and governments at all levels would be able to use the virtual money.


Are there any guidelines regulating eNaira?

CBN released the “Design Paper For The eNaira” eNaira design White paper on October 24, 2021, which reveals the aims, values, and the eNaira project proposal. eNaira architectural design, initial eNaira capabilities, what roles different economic players play when the eNaira is launched, the vulnerabilities of the eNaira and how they will be handled, and the eNaira Implementation roadmap are all covered in further depth in the White Paper. The following is taken from the eNaira white paper:

  • The Naira shall be managed by the CBN through the Digital Currency Management System (DCMS) to issue eNaira and its unique code run through blockchain technology.

 

  • The eNaira will be a hybrid or a two-tiered CBDC architecture – CBN will issue the CBDC, including managing the central ledger of all transactions, while leveraging the existing financial system.

 

  • The eNaira is based on Hyperledger Fabric variant of the DLT – this will allow the CBN to manage wallets while financial institutions and regulated market players will act as nodes on the network.

 

  • The eNaira will use existing identity infrastructure – BVN, NIN, TIN etc. – to uniquely identify individuals and corporate entities to ensure a robust KYC framework.

 

  • Financial institutions shall keep a treasury eNaira wallet for securing and administering eNaira on the DCMS.

 

  • The eNaira is based on Hyperledger Fabric variant of the Distributed Ledger Technologies (DLT). This will allow the CBN to manage wallets while financial institutions and regulated market players will act as nodes on the network

 

  • The two-factor authentication and other measures shall be implemented to guarantee the security of the eNaira wallet in line with data security regulations.

 

  • The charges for eNaira transactions shall conform with the Guide to Charges by Banks, Other Financial and Non-bank Financial Institutions, released by the CBN.

 

  • Financial Institutions are mandated to abide by the Money Laundering (Prohibition) Act 2011 (as amended), the Terrorism (Prevention) Act 2011 (as amended) and all subsisting anti-money laundering laws and regulations as may be issued by the CBN at any time.

 

  • The eNaira will not earn interest.

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