As promised, we recently, and while our alumni are aggressively applying all that they learned in their business operations, we remain ever vigilant in our duty of spotting and identifying new and exciting opportunities for our customers.
The end of the year is fast approaching, and what a year it’s been. Traditionally, the end of the year brings with it much reflection and planning, as we look back at the closing year and look ahead to the coming one. Amid all this thinking, however, one can often miss out on promising opportunities which may present themselves as the year ends. Therefore you need a trusted business partner (i.e., Wema Bank) to keep an eye out on your behalf.
In the context of the Nigerian market in 2021, one of such opportunities which we have flagged is the rollout of the CBN’s eNaira on Monday, October 25, 2021. This innovation, the first of its kind on the African continent, is billed to expand nationwide access to banking, enable more remittances, and increase Nigeria’s GDP by $29 billion over the next ten (10) years, and it offers up an exciting plethora of opportunities for you as a business owner, to grow your business. It is because of the exciting potential of this new currency that we at Wema Bank have decided to make the eNaira the subject of this month’s newsletter.
But isn’t it bitcoin?
Think of your regular everyday business transactions. If you are like most Nigerians, the scene playing in your head would go something like this: a customer walks into your shop and identifies a product that they want to pay for. At the point of payment, the customer will reach into their pocket and pull out their wallet (or a crumpled wad of cash), count out the required number of notes, and then hand them over to you as payment. You will then take the cash, recount it to verify that it is the right amount, and then put the money in your own wallet (or in the till of your cash register) and (sometimes) hand over a receipt. Once this is completed, the transaction is done.
With the eNaira however, this same transaction would be performed entirely without the use of physical cash, as payments will be made with the use of mobile devices—much like our regular bank transfers today.
Contrary to what you may think, the eNaira is not bitcoin. Unlike bitcoin (and other coins like Ethereum, Dogecoin and so on) which are cryptocurrencies that are not issued by a central authority; the eNaira is a digital currency issued by a Central Bank—a Central Bank Digital Currency (CBCD). This means that the eNaira is a legal tender of the Federal Republic of Nigeria, and as such is a direct liability of the CBN. It is therefore regulated and subject to the various banking laws of the nation.
Johnson Chukwu, the Founder and Managing Director of Cowry Asset Management Limited explained the eNaira by saying, “it’s not in coins and it’s not in notes, it’s in [a] virtual format. So, you can’t physically hold it, but you have it as a store of value, as a piece of payment, and it’s backed by the good faith of the central bank . . . for every unit of that currency you hold, the central bank can give you physical naira.”
The CBN has continuously reiterated the fact that the eNaira is not intended to replace the physical Naira but is only expected to work alongside it; as expressed in the digital currency’s tagline: “Same Naira, more possibilities”. Furthermore, the eNaira and the Naira will always be exchanged 1:1.
You can consider the eNaira as yet another stage in the CBN’s drive to reduce cash usage in Nigeria.
Why do I need the eNaira?
The eNaira will complement existing payment options that are currently available via mobile banking apps, point of sale (POS) terminals, USSD, Quick Response (QR) codes, Internet banking and other channels.
In its Design Paper for the eNaira, the CBN has stated that it intends for the eNaira to do the following:
- Improve the availability and usability of Central Bank money
- Support a resilient payment ecosystem
- Encourage financial inclusion
- Reduce the cost of processing cash
- Increase revenue and tax collection
- Enable direct welfare disbursements to citizens
- Reduce the cost & improve the efficiency of cross-border transactions
- Facilitate diaspora remittances
Additionally, transactions executed with the eNaira will guarantee:
- Instant settlement
- 9% service availability and reliability
- Low charges
- No dispensing errors
- No reconciliation issues
- Low charges (the CBN has assured users of zero charges for the first 90 days of the eNaira’s launch—October 25, 2021)
- Nationwide acceptance
- No dispensing errors
- Advanced data privacy and security
As a merchant on the platform, the following types of transactions are available to you:
- Merchant/Business to (commercial) bank account
- Merchant/Business to Person (Individual)
- Cash or (commercial) bank account to eNaira Speed wallets
Merchants will pay no fees for withdrawals and deposits to and from their bank account. They are also required to sweep their outstanding eNaira balances into their account(s) with a financial institution at the end of every day. There are no limits on transaction amounts for merchants (business owners). It should also be noted that the customers will not earn interest on eNaira deposits.
The eNaira payment system will offer a broad range of services that will expand as adoption arises and new use cases are developed.
How can I get the eNaira?
To access and use the eNaira, you will have to create an eNaira wallet, which is the digital storage that holds the eNaira. This wallet, the CBN’s Speed Wallet is available for free download on the Google Play store and the Apple App store. Each wallet is tied to a BVN or NIN and can only be used once to prevent duplicate identities and wallet creation on the eNaira platform.
The requirements for a Merchant Wallet are as follows:
| Category | Requirement | Daily Transaction Limit (₦) | Daily Cumulative Balance (₦) | |
| Bank Account Holders | BVN, TIN & Bank confirmation | Send
No limit |
Receive
No limit |
No limit (with Auto sweep trigger) |
The eNaira payment system will be compliant with AML/CFT guidelines to ensure its safety and integrity, and to achieve this, the CBN has adopted an account based CBDC, meaning that all eNaira wallets are linked to the user’s account in an approved financial institution, like Wema Bank. To facilitate this, customers will have to select their preferred banking partner (Wema Bank) during the onboarding process.
Once the wallet has been created, users will be able to transfer money into it from bank accounts or credit cards and send and receive payments to others using the digital currency.
Also note that the technical partner of the CBN for the eNaira rollout, Bitt Inc., has announced plans to release a version of the eNaira wallet that will be accessible to previously unbanked users.
Conclusion
In its Regulatory Guidelines on the eNaira, the CBN outlines the roles of merchant users of the digital currency. These are:
- Providing customers with alternative channels for making transactions using the eNaira
- Providing cashback services for customers
- Publicising the option of eNaira payment for transactions at merchant locations
- Protecting their eNaira speed wallet credentials against fraudulent access.
The successful delivery of these roles will ensure for an inclusive and rewarding user experience with the eNaira.
As said previously, the expectation of the CBN is that the eNaira will complement the “traditional” (physical) Naira by providing a less costly, more efficient, generally acceptable, safe, and trusted means of payment. This is sufficient reason for a businessowner to seek to move their payments and other financial transactions to the eNaira ecosystem.
In addition to the aforementioned benefits, the potential offered up by the eNaira as a tool for cross-border trade and remittances, particularly in light of the launch of the Africa Continental Free Trade Agreement (AfCFTA), is one that promises to boost the business operations of any businessowner who onboards on the platform. This, if all the reasons that have gone before are not enough to sway you, is certainly reason enough for the astute businessowner to get some eNaira as soon as possible.
Author- Somtochukwu Okoroafor