Zenith

  • Latest News

    Saturday, June 11, 2022

    CBN to Introduce USSD Code to Boost eNaira

    In October, Nigeria became the first country to launch a Central Bank Digital Currency (CBDC) dubbed eNaira. The swift development of the eNaira followed a cryptocurrency frenzy that rattled central banks globally, threatening fiats as it burgeoned through wide adoption.

    For a country like Nigeria that its currency – the naira – was on a free fall, giving the people a digital fiat as an alternative to cryptocurrency seemed like a solution.

    However, the launch of the eNaira has done not much to save the naira from losing value, mainly due to poor adoption. As of early this year, the eNaira has recorded nearly 700,000 downloads, 165,000 consumer wallets and 2800 merchant wallets. A very poor turnout compared with the number of people who use cryptocurrency despite that it is prohibited in Nigeria.

    Now the Central Bank of Nigeria (CBN) wants to introduce the Unstructured Supplementary Service Data (USSD) code as part of steps to entice more people to use the digital currency.

    NAN reports that Kingsley Obiora, the CBN Deputy Governor disclosed this at the IMF African Department Speakers Series held virtually on Friday. Obiora said the introduction of the USSD code became necessary to improve financial inclusion in the country and to ensure people without smartphones could still transact on the eNaira platform.

    “We have made serious progress in the last seven to eight years because when the current governor resumed in 2014, one of the pillars of his vision was to significantly improve financial inclusion.

    “So at the time, we were at 48 per cent of our population within the financial system and given several policies that he conceived and implemented, we are almost at 70 per cent.

    “That still leaves us with about 30 per cent of our population out of the financial system and we believe the CBDC can help reduce that number even more.

    “A lot of people might not have smartphones but that is essentially the next step of our improvement in the CBDC, to introduce the USSD code, so those that do not have smartphones can still transact,” Obiora said.

    The CBN deputy governor said that the barrier to entry on the CBDC platform was low, which made it possible for everyone with a Bank Verification Number (BVN) to be onboarded into the eNaira platform in a few minutes.

    Obiora said the value of the country’s digital payments grew from 324 billion dollars in 2008 to about 2.4 trillion dollars presently, adding that Nigerians were now used to digital payments.

    ”As you know, within the content we have one of the largest Fintech companies, Futterwave, Paystack, etc,” the apex bank boss added.

    He said that the CBDC had significant benefits for Nigeria, which was why the CBN decided to introduce it.

    Obiora listed the benefits to include rapid financial inclusion, reducing the cost of processing cash, enabling direct welfare payments to citizens, and reducing the informal economy.

    Others are improving tax collection, boosting cross-border trade and remittances, reducing the cost and improving the efficiency of payments and just endearing economic growth in general.

    He, however, listed some of the key risks to introducing the CBDC including banking sector disintermediation, operational risks of knowing that there is non-stop service, cyber security risks, internet disruptions and financial literacy.

    Obiora said that Nigeria was doing well based on a PwC report, which showed that Nigeria was number one in terms of adoption, adding that the CBN would keep growing and improving on the system.

    Cryptocurrency remains a big subject yet to be addressed by Nigeria’s financial regulator. Though the Securities and Exchange Commission has outlined guidelines to regulate the entire Nigeria’s digital asset ecosystem, the CBN is yet to come on board with the idea.

    Obiora said cryptocurrency would not become part of the country’s financial system for now because of the volatility that it could create for the system.

    • Blogger Comments
    • Facebook Comments

    0 comments:

    Item Reviewed: CBN to Introduce USSD Code to Boost eNaira Rating: 5 Reviewed By: BrandIconImage
    Scroll to Top