If you missed the news, the Nigerian government has announced the official launch of the tokenized and ‘cryptographic’ Nigerian Naira — the E-Naira. With the official wallet available in all application stores, Nigeria becomes the first African country to embrace blockchain technology on a nationwide scale.
China’s digital Yuan is yet to launch officially, Nigeria might as well be the first country to use a Central Bank Digital Currency.
Not bitcoin; actually, cryptocurrencies are still banned in Nigeria, but as far as the adoption goal is concerned, this is a huge breakthrough for blockchain technology. Nigeria’s over 200 million sparsely located citizens can now access some basic banking services without necessarily owning a bank account.
For a country struggling to cope with its growing population amidst pronounced corruption and spiking cost of living, the E-naira comes as a necessity. Regardless of the resources geared towards developing the E-naira technology and rolling it out, the Federal Republic of Nigeria has taken a bold step in the ‘right’ direction.
An excess of 206 million people dispersed over an area of over 900,000 square kilometers in an ‘oil-rich’ nation struggling to provide basic amenities for its citizen. The banking system in Nigeria is expectedly poor and easily accessible to only a few. Depending on presiding periodic conditions, this number is greatly reduced at times. For visitors, exposure to this difficulty might depend on the area being visited and of course, period of visitation.
Apart from its sparsely distributed population and limited resources, Nigeria faces an uphill battle with internal insecurity. Clouded by insurgency and separatist movements, the security situation in the most populated African country is not trustworthy. Financial management in a location like this is a herculean task.
Nigerians have since turned up against this development, citing banking applications as an efficient substitute for the E-naira. Well, this argument falls through in many instances.
Banking applications are developed and controlled by banking institutions to simplify intra and inter-bank operations by their customers. Using a banking application, customers can perform basic financial operations such as transfer and receipt of funds, bill payments, and a number of other operations. But this service is basically for citizens who are privileged enough to own a bank account.
For citizens leaving in very rural areas, financial management in an insecure region is a nightmare. Loss of funds due to misplacement and theft is a popular story in settings like this. But this is just one of the many unfortunate tales of the unbanked in the west African nation.
Carrying fiat papers around has never been a fun exercise. Due to the slow adoption of financial technologies in Nigeria, swift payment strategies are unavailable in most stores and traditional commercial setups. This is partly due to slow technological advancement and also due to the poor banking system. Using paper money is inevitable in cases like this.
Thanks to constraints involved in exchanging the Naira within and outside Nigeria, using the Naira isn’t so easy for foreigners visiting the nation. Sending and receiving Naira outside the country without having an account with a Nigerian banking institution is almost impossible too.
Nigeria’s CBDC solves these problems in a very classy way. Built on blockchain technology, managed by the government; the E-Naira will allow people within and outside Nigeria to perform basic financial transactions using the tokenized Naira. The E-Naira wallet allows citizens to bridge over their fiat to a more flexible platform and relatively more secure. Well, it’s impossible to say for certain if Nigeria’s ‘blockchain’ is truly decentralized.
E-Naira and its wallet share a number of principal blockchain and cryptocurrency features; generality and security respectively. In comparison with private-owned banks and banking applications, E-Naira being controlled by the Federal Government is arguably a more secure facility.
E-naira wallet is accessible to anyone who owns a smartphone anywhere in the world, holders will be able to send and receive Nigerian currency without even having an account with a Nigerian financial institution.
The Nigerian Naira is boundless, thanks to the E-naira innovation.
A step forward? I totally think so. But the Nigerian government hasn’t always been the best when it comes to management; the e-Naira is still a prospect filled with uncertainty. Important things to note is that using the E-Naira is currently not cheaper than using existing options and KYC levels determine the extent of use. However, this is only for people who enjoy accessible banking services. The unbanked and people transacting outside the country using the Naira may find this very cheaper than the hassles they go through currently. This development is basically for this set of people.
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