There are indications that the Central Bank of Nigeria, CBN, is almost ready to usher in a new level of financial transaction experience in Nigeria called eNaira.
Last week the apex bank announced the formal engagement of the global Fintech company, Bitt Inc., as the Technical Partner for its digital currency which is due to be unveiled later in the year.
Ikeanumba gathered that ‘Project Giant’, as the Central Bank Digital Currency (CBDC) pilot is known, has been a long and thorough process for the CBN, with the Bank’s decision to digitize the Naira in 2017, following extensive research and explorations. Given the significant explosion in the use of digital payments and the rise in the digital economy, the CBN’s decision follows an unmistakable global trend in which over 85 percent of Central Banks are now considering adopting digital currencies in their countries.
The apex bank’s Director of Corporate Communications, Mr Osita Nwanisobi, said that CBN’s selection of Bitt Inc, from among highly competitive bidders, was hinged on the company’s technological competence, efficiency, platform security, interoperability, and implementation experience.
According to him, ‘‘In choosing Bitt Inc, the CBN will rely on the company’s tested and proven digital currency experience, which is already in circulation in several Eastern Caribbean Countries.’’
The other spring of confidence in the Bitt Inc. partnership was that the firm was key to the development and successful launch of the CBDC pilot of the Eastern Caribbean Central Bank (ECCB) in April 2021.
The CBN says the digital currency will offer parity of value and will operate as a non-interest-bearing asset.
In a sensitization document sent to commercial banks in the country, the CBN outlined several design features of the digital currency.
According to the document, Nigeria’s digital currency will run alongside the country’s fiat currency, with the CBN responsible for issuing, distributing and redeeming the digital currency among other monitoring and management functions.
Based on the sensitization document, Nigeria’s digital currency will function under a tiered Anti-Money Laundering and Know Your Customer (AML/KYC) structure with different transaction limits.
The bottom of the AML/KYC pyramid will reportedly encompass unbanked citizens who will be mandated to provide their national identity-linked phone numbers for verification. Users in this category will be limited to a daily transaction limit of N50,000 (about $120).
Citizens with bank accounts can fall under the second and third tiers depending on the number of AML/KYC steps completed. These two levels will have daily limits of N200,000 ($487) and N1 million ($2,438), respectively.
Users of the third tier will likely have to complete a physical AML/KYC verification process in addition to the bank verification number, BVN, requirements stipulated for tier two.
Users classified as merchants will also fall under the same N1million limit as tier three but will have no restrictions as to the amount they can send to their bank accounts.
With this, it shows the CBN plans to ensure seamless transfers between e-naira wallets and bank accounts with no fees for several types of transactions. The zero-fee structure is likely a means to incentivize the adoption of the digital currency, especially amid complaints about the onerous transaction costs associated with mobile and digital banking in the country.
The CBN document also offered likely process flows for international money transfer operators (IMTO) and the proposed e-Naira indicating plans to integrate the digital currency with the CBN’s foreign exchange, Forex, control policies.
