The President said this on Monday at the unveiling of eNaira
at the State House.
According to the President, the launch of eNaira makes
Nigeria the first country in Africa and one of the first few countries globally
to introduce a digital currency.
The new payment system, which took the Central Bank of
Nigeria (CBN) four years to roll out, is expected to drive financial inclusion,
serve as a backbone for electronic payment in Nigeria and also enable the
movement of more people from the informal to the formal sector, hence scaling
up the tax base of the country.
President Buhari also expects it to enable the government
send direct payments to citizens eligible for specific welfare programmes as
well as foster cross border trade, a statement signed by presidential
spokesperson Femi Adesina said.
“Let me note that aside from the global trend to create
Digital Currencies, we believe that there are Nigeria-specific benefits that
cut across different sectors of, and concerns of the economy,” the President
noted.
“The use of CBDCs (Central Bank Digital Currencies) can help
move many more people and businesses from the informal into the formal sector,
thereby increasing the tax base of the country.”
The President also commended the Governor of the Central
Bank, Godwin Emefiele, his deputies and the entire team of staff who worked
tirelessly to make the launch of Africa’s first digital currency a reality.
Work intensified over the past several months with several
brainstorming exercises, deployment of technical partners and advisers,
collaboration with the Ministries of Communication and Digital Economy and its
sister agencies like the Nigerian Communications Commission (NCC), integration
of banking software across the country and painstaking tests to ensure the
robustness, safety and scalability of the CBDC System, ” he said.
The President also used the occasion of the unveiling of the
eNaira to explain why he approved the use of the digital currency.
“In recent times, the use of physical cash in conducting
business and making payments has been on the decline. This trend has been
exacerbated by the onset of the COVID-19 pandemic and the resurgence of a new
Digital Economy,” he said.
“Alongside these developments, businesses, households, and
other economic agents have sought for new means of making payments in the new
circumstances.
“The absence of a swift and effective solution to these
requirements, as well as fears that Central Banks’ actions sometimes lead to
hyperinflation created the space for non-government entities to establish new
forms of ‘private currencies’ that seemed to have gained popularity and acceptance
across the world, including here in Nigeria.
“In response to these developments, an overwhelming majority
of Central Banks across the world have started to consider issuing digital
currencies in order to cater for businesses and households seeking faster,
safer, easier and cheaper means of payments.
“A handful of countries including China, Bahamas, and
Cambodia have already issued their own CBDCs.
“A 2021 survey of Central Banks around the world by the Bank
for International Settlements (BIS) found that almost 90 per cent are actively
researching the potential for CBDCs, 60 percent were experimenting with the
technology and 14 per cent were deploying pilot projects.
“Needless to add, close monitoring and close supervision
will be necessary in the early stages of implementation to study the effect of
eNaira on the economy as a whole.
“It is on the basis of this that the Central Bank of Nigeria
(CBN) sought and received my approval to explore issuing Nigeria’s own Central
Bank Digital Currency, named the eNaira.”
Equally, the Nigerian leader noted that his approval was
also underpinned by the fact that the CBN has been a leading innovator ‘‘in the
form of money they produce, and in the payment services they deploy for
efficient transactions.’’
He noted that Nigeria’s apex bank has invested heavily in
creating a Payment System that is ranked in the top ten in the world and
certainly the best in Africa.
“This payment system now provides high‐value and
time‐critical payment services to financial institutions, and ultimately serves
as the backbone for every electronic payment in Nigeria.
“They have also supported several private‐sector initiatives
to improve the existing payments landscape, and in turn, have created some of
the world’s leading payment service providers today,’’ he said.
In his remarks, the CBN Governor explained that eNaira is
Nigeria’s CBDC and it is the digital equivalent of the physical Naira.
”As the tagline simply encapsulates, the eNaira is the same
Naira with far more possibilities. The eNaira – like the physical Naira – is a
legal tender in Nigeria and a liability of the CBN. The eNaira and Naira will
have the same value and will always be exchanged at 1 naira to 1 eNaira,” he
said.
Emefiele added that the CBN has given careful consideration
to the entire payments and financial architecture and has designed the eNaira
to complement and strengthen these ecosystems and has implemented secure
safeguards and policies to maintain the integrity of the financial system.
He pledged that there would be strict adherence to the
anti-money laundering and combating the financing of terrorism (AML/CFT)
standards in order to preserve the integrity and stability of Nigeria’s payment
system.
According to Emefiele, since the eNaira platform went live,
there has been overwhelming interest and encouraging response from Nigerians
and other parties across the world with over 2.5 million daily visits to the website.
He listed the following milestones:
“33 banks are fully integrated and live on the platform, 500
million has been successfully minted by the Bank, N200 million has been issued
to financial institutions, over 2,000 customers have been onboarded and over
120 merchants have successfully registered on the eNaira platform”.
The CBN governor also used the occasion to commend President
Buhari for making history, yet again, with the launch of the eNaira – the first
in Africa and one of the earliest around the world.
He also dispelled fears on the nation’s foreign reserves,
saying the reserves are strong and getting stronger by the day.
“Mr. President, as you make ground breaking reforms, there
have been continuing debate on the true value of the Naira. Rather than worry
today on the direction of the exchange rate, let us take a step back and
analyze how we got here in the first place.
“Please recall that since the advent of the International
Monetary Fund (IMF) led Structural Adjustment Programme (SAP) in 1986, and the
introduction of the Second Tier Foreign Exchange (SFEM) market, the Naira has
been on a one-way free fall from parity to the US Dollar in 1984 to over
N410/USD today.
“Some 35 years later, we have not been able to achieve the
many promises and objectives of that programme.
“Instead, what we have seen is widespread import dependency,
which has wiped out most of our production and manufacturing bases and exported
all our jobs in the process.
“What has happened to the massive textile factories across
our nation such that we import almost all cotton products when we are rich in
cotton?
“What has happened to our vehicle assembly plants across the
nation such that we import most vehicles and have become a massive dumping
ground for dying second-hand vehicles?
“What has happened to our rubber plantations through which
we made the best tyres and rubber products in the world? What has happened to
our groundnut pyramids? What has happened to our Cocoa farms? What has happened
to our palm oil mills?
“Under your leadership, Mr. President, we must stop this
decline for good! We must return to massive homemade production; we must get
our people working again. We must create the economic environment for massive
domestic production and significant non-oil exports.
“As custodians of your national reserves, let me first
assure you that there is no cause for alarm. Our FX reserves are strong and
indeed getting stronger by the day, crossing the 40 billion USD mark, and is
one of the highest in Africa – and growing.
“But we cannot fritter our reserves away on cheap imports
and currency speculators. We must return to an employment-led growth anchored
on productivity and rewarding producers of local goods, services, innovation
and new technologies.
”If you consume cheap imports and export our jobs, we will
make you pay dearly; but if you produce locally – with little or no foreign
inputs beyond machinery, we will support you, and the markets will reward you
abundantly,” he said.
In addition to all policies and actions of the CBN to
support the economy especially through the trying times of COVID-19, Emefiele
announced a new financial instrument titled “The 100 for 100 PPP – Policy on
Production and Productivity”, which will be anchored in the Development Finance
Department under his direct supervision.
He explained that under this policy the CBN would advertise,
screen, scrutinize and financially support 100 targeted private sector
companies in 100 days, beginning from 01 November 2021, and rolling over every
100 days with new set of 100 companies, whose names will be published in
National Dailies for Nigerians to verify and confirm.
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