The introduction of Central Bank Digital Currencies (CBDCs) has always seemed like a football competition to me, with all the countries who are at various stages of adoption on the league table. It seemed to have come as a sudden rush by central banks of – the tally now is – 81 countries to start their journeys into CBDCs within 2020 till now, but the truth is that it has been in the works for most of these countries for so much longer. Different countries are establishing theirs for different reasons, and just like goals in a football match, many have prepped, trained, hired players, set formations, to ensure they score the specific goals they have planned to. Some teams are warming up, others are on their pitches, while the rest are intent on studying the game plans and moves of the ones deep in it, and then adopt or tweak.
Nigeria is one of the countries warming up. In nine days, on October 1 to be more precise, Nigeria will find herself on the CBDC League pitch, playing against herself, and the rest of the world. She plans to launch the eNaira. Yes, for early adopters, the CBDC game is tripartite, and weird, and cannot be an “us vs. them” game, because who is “them” here? The league is still fresh; there are a lot of rules-formation and experimentation still going on. The objective now for countries is to outdo themselves, and set a strong and formidable pace for the rest of the world. Nigeria is in that shoe, and hopes to be a pace-setter (the pace-setter), as she just might be the 12th nation in the world to fully adopt the use of CBDCs after The Bahamas, the Eastern Caribbean countries (Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines) and China.
The Giant of Africa is entering the pitch to score eight main goals to stay on top of the league table. These goals have been drawn from the peculiarities of financial transactions in Nigeria itself, and the realities of financial challenges of fiat currency experienced all over the world. The goals are as indigenous as they are universal; as particular as they are wholesome. And each goal has players – stakeholders of the digital currency – primed to use their unique positioning and skill to see to it that it is not a goal that can be discounted. No offsides, no goal-outside-play, no handballs. Just straight, transparent-to-the-world, and a strong leverage for the country in this CBDC game.
Nigeria says she will score the first goal using local talents. eNaira has the ambition to present itself as that currency that unbanked and underbanked Nigerians and Nigerian businesses will run to, rely on, and enjoy, better than the fiat currency they have either not had access to, or have been on the run from, for one reason or the other. As at 2018, 36.8% of Nigerians did not have access to financial services. The aim is to make the eNaira easy enough, safe and secure enough, and hassle-free enough in its use that the moment one move is made by local talents towards an unbanked or underbanked Nigerian or Nigerian business, they are sold into immediate adoption.
The second goal Nigeria wishes to score will have financial houses already in the Nigerian financial ecosystem as the target strikers. From capital market players, to commercial banks, to industrial banks, to insurance organizations, to finance technology and finance support organizations, the eNaira is prepped to be their ally, and not only that, the very tool they can use to affect the ecosystem they play in in such a way that eNaira begins to foster economic growth. The number one strategy for this is easier access (to financial services offered by these houses). The number two strategy is transaction costs at nearly-zero interest transaction rates. Scoring the third goal has been placed on the shoulders of the Nigerian Government Ministries, Departments and Agencies (MDAs), at the Federal, State, and Local Government Levels. This goal is built around making the eNaira less and less accessible for persons with fraudulent intent. An average of 80% of all financial frauds committed per year on the Naira is electronic. This reality is what has driven the design for this goal towards achieving that state of being where persons who wish to commit financial crimes (fraud, laundering, identity theft) become so afraid of touching the eNaira that they eventually stay away from it completely. eNaira’s traceability, at per-transaction and per-unit levels, is the tool Nigeria has said she will use to make this happen.
The fourth goal will be a combination effort of regular Nigerians and the Government MDAs, like a one-two clinical finish that bamboozles the defense. And boy, will this goal bamboozle current defenses and obstacles it faces right now if actuated to design. One of the things that connect government and citizens is receiving government aid, benefitting the citizens with the aid relief, and benefitting the government by keeping account of key indexes around standard of living of her citizens. Currently, the Nigerian National Social Register (NSR) has only about 2.6 million households (about 11 million people) registered on its platform. That accounts to about 6% of the population of the country. This is so low because there has not really been an incentive to marry the government’s laborious efforts to ascertain the social status of her citizens and the citizens’ desires to be indexed by the government. eNaira’s design on directness of transaction aims to become this needed incentive, that will end up translating to a reality where government aid becomes a simple send-receive-record process.
The fifth goal involves the same players for goal number four. The brace between goal four and goal five is delicious by design, and as goal four’s social appeal tilts towards the citizens (inasmuch as it benefits both government and citizens), goal five’s social appeal tilts more towards the government; and like goal four, it also does benefit both government and citizens. The goal is revenue increase. Nigeria says its adoption of eNaira will see government save up to 80% of the costs associated with the production, storage, transportation, and disposal attributed with cash. Adoption will also reduce tax evasion, and streamline tax collection channels, due to the eNaira’s traceability. Paying government dues will become a process that completely eliminates purported cases of middlemen, and as such, encourages citizens to pay their respective dues, and not avoid them. All three tactics, driven towards increased revenue.
The sixth goal involves international players. It is a goal that aims to connect home and abroad through finances better than has ever been seen or experienced before. Nigeria says she is making the remittance process so easy that sending money from foreign currency to Nigerians at home as eNaira becomes nearly exact as making a regular money transfer to anyone at home from home, and even faster.
The seventh goal involves our international players too. It addresses the other thing Nigerians do with international currency aside sending home – making purchases with it. Which in turn, involves converting to other currencies before trade is complete. Before now, the process has been a hassle, especially with differences between official rates and parallel market rates, the fluctuations of the rates, unforeseen price inflations, among other obstacles. Nigeria has said it has designed eNaira to address these hassles by making each process of getting remittance from diaspora cheaper, safer, quicker, and better. Nigeria has also applied the same design to local trade with the eNaira as well, taking on the trade challenges on this CBDC league from both angles – the perfect counter. The eight goal addresses what many see as the elephant in the room. It is the goal meant to beat the box-packing tactics of the opposition in one fell swoop. Security. Nigeria has said that eNaira cannot be forged or counterfeited due to its unique identity and security structure. It is loaded, on top of the security facilities in its Distributed Ledger Technology, with bleeding-edge CFT (Combating the Financing of Terrorism), AML (Anti-Money Laundering), and KYC (Know-Your-Customer) facilities that make it secure for every legitimate user, and a ticking time bomb for anyone who attempts to use it illegitimately.
As amazing and probable these goals are however, for them to count and not be cancelled by the socio-economic VARs that already challenge them, Nigeria must ensure that she is well-prepared to handle waves of traffic right from launch date, well-prepared to answer all the questions of critics and naysayers satisfactorily ith evidences, well-prepared to troubleshoot any eventual issues in real-time so that users do not suffer losses they did not bargain for, and finally, Nigeria must be well-prepared to be meticulous: pay attention to the numbers and statistics that arise from the use of eNaira, analyze them, and ensure that newer and more precise strategies are consistently being designed and implemented to see that those numbers and stats are always in the green, just like Nigeria’s desire to remain in the green of the pitch of this league, in the leading position. As a patriot, I hope Nigeria does not only score, but wins, on all fronts.
Adenike Ogundipe Momoh is a private sports analyst and restaurant waitress. She has been involved in sourcing, collating, analyzing and interpreting data for top Nigerian and international sports newspapers and magazines for 5 years running. In her spare time, she is either watching Arsenal FC or watching Marvel movies.