Meaning of eNaira and key Explanations


    Meaning of eNaira and key Explanations  The Central bank of Nigeria promises to launch its digital currency, the eNaira on October 1st, 2021. But was launched on October 25th. The reason for the shift is likely due to the events of the independence day celebration in Nigeria. The central bank digital currency (CBDC) has some features that the cash form of Naira doesn’t have. In this article, let’s focus on explaining eNaira. Meaning of eNaira and key Explanations

Meaning of eNaira and key Explanations

Definition of E-Naira

According to the Central Bank of Nigeria (CBN), eNaira is the central bank digital currency (CBDC) issued by the central bank of Nigeria as a legal tender. It is the digital form of the Naira and will be used just like cash.





It can also be defined as a digital currency made available by the central bank of Nigeria and serves as a legal tender, medium of exchange, and store of value.

Key Explanations

The electronic money will be issued by the Central bank of Nigeria. Nigerians may start using the eNaira starting October 25th. An individual registered on the website or mobile app. You can buy digital money from any of your bank accounts. Digital money is an asset to the individual or corporate body in possession of it. And it is a liability to the CBN




With this platform, an individual can transfer money from one country to another without the need for foreign exchange. This is made possible through the eNaira wallet. The wallet aids storage and transfer of the currency. An individual in the United Kingdom for example can send money to a person in Nigeria. Also, a family member in Canada can remit cash to his mother in the village.





The CBDC is a legal tender. This means that it is backed by the law of Nigeria. Therefore, it must be used by everyone in the country. Within the country, it can be used to trade and invest. You can use it to order a product in an e-commerce store. It can be saved in the wallet or invested in an investment platform that will in the future utilize the eNaira infrastructure and its API. Digital money is pegged to fiat currency. Therefore, it is not backed by Gold, but the value of fiat money in Nigeria.







What else you should know about eNaira?

Blockchain technology was not used to make the eNaira. This means that the CBDC is in a centralized ledger. e-Naira will aid borderless transactions. In addition, it reduces transaction costs. For example, you want to make a transaction from Nigeria to another country using a debit card. However, the transaction is effected by the exchange rate and it is outside the border of the country, an additional fee will be charged by your bank. Thereby, increasing the cost of the transaction. With blockchain te, the website or app can be assessed anywhere in the world. Border restriction la that should increase the cost of transactions has been eliminated. Meaning of eNaira and key Explanations






What is eNaira?

eNaira is the name given to the CBN’s first proposed digital currency.

The new currency will not replace the physical Naira but will act as a digital representation of it.

How will the eNaira work?

The eNaira will work as a digital version of the physical Naira.






Financial institutions licensed by the CBN will be responsible for ID verification, eNaira payment processing, and creating wallets for customers to hold their eNaira.

The eNaira wallet is similar to a bank account and is created in the same way; however, it will be a separate account that is not connected to an already existing bank account.

Transactions will be possible between two parties that both have an eNaira wallet, which allows you to store, send, and receive eNaira.

Challenges of the proposed e-naira

Just a while ago, the Federal Government of Nigeria through the Central Bank of Nigeria announced that it would be introducing a local or call it homegrown cryptocurrency. This digital currency will be called e-naira. Many people have applauded the FG for taking this step especially when other countries like India, China, South Africa, Ghana etc have also decided on a home-grown digital currency. Nigeria should not “carry last” as we say in our local parlance.





However, while some people have questioned the rationale for such introduction and the value to the economy, others have simply concluded that it is a project that will fill the void of inaction, giving the government a sense of psychological satisfaction. Recall that before October 2020, cryptocurrency trading had become rife and pervasive. It became the first choice investment channel for mostly the youths (and few adults too). The United States of America was the only country ranked ahead of Nigeria in cryptocurrency trading. Why was this so? Our population is youthful; we have a bubbling tech ecosystem; an unstable currency and a high remittance activity. Top government officials, finance experts and notable businessmen were rumoured to have taken a significant position in cryptocurrency. The industry boomed and the people prospered.






This was the position until the #EndSars protest in October 2020 when despite every effort by the FG to stop the flow of financial support for the organisers, cash still flowed unabated as contributors had gone underground through the use of crypto. This saw an age-long classical military tactics failed. This failure was followed by the 27% reduction in diaspora remittances that year when crypto trading in Nigeria climaxed $309.6 million. The ban, which followed in February 2021, was therefore not a surprise driving the operators underground. While many seek alternatives, CBN continues to assure Nigerians of the great opportunities the idea of e-naira will bring. This government assumption is the crux and motivation for this article.

One, I believe that government needs to come clean and embrace reality with regards to comparing e-Naira to a cryptocurrency like Bitcoin for instance. Both are not the same and do not meet the same need. I have read many comments from people on this issue giving the reason why it is not the same. Those technical reasons are not what I am concerned with. I am just concerned with the everyday reasons on the street, why they are both not the same and why people will not receive them as same. Have you noticed that our people prefer Ponzi schemes to conventional regulated financial houses? It was reported recently that Nigerians lost about $50million to MMM during its reign and from a total of over one 125,000 investors, a certain forex trading outfit with branches across Nigeria went down with over N171 billion of investor’s money.

‘One major attraction to crypto in Nigeria was the fact that it was not regulated. Our people’s orientation is informal and unstructured and we all thrive within this space. This has also accounted for the reason why the Nigerian economy, despite all the shocks, has not been reduced to the level of other countries that suffered the same fate. The Nigerian economy is significantly unstructured and informal so anything that requires structure, regulation and order may become unpopular with the people. Another major attraction of Nigerians to crypto is the adrenalin rush, which bothers on the high risk associated with it.




‘Many Nigerians like to sow and reap quickly. They despise the farmers’ attribute of patience when it comes to investment. If the e-naira lacks these two attributes, it is less likely to succeed.






‘Two, The FG should not forget its relationship with the larger populace and the reason(s) behind the ban of crypto. Many Nigerians believe that the government have continued to devise ways to monitor the financial activities of the population and that the floatation of e-Naira does not come with true intentions. This lack of trust between the government and the populace is an issue that sabotages the idea. Some people have had their accounts frozen for their involvement with the protest against government activities and they had to move their investment to crypto to evade government watch. The attribute of centralisation and monitoring creates a sharp difference between e-Naira and crypto and may be a bane to the success of e-naira.

Three, as a regulator, the CBN has in its guidelines for financial institutions, the permissible and non-permissible business that the licensed institutions must or must not engage in. One of the businesses that must not be done by financial institutions is any business that is speculative in nature. A true Crypto is speculative and does not have a static value. The question many are asking is: Is the CBN going to superintend over a speculative business? What would they do should e-Naira lose value? Will they still have the confidence of the public? The role of the CBN as Bankers of last resort does not only mean bankers to the Bankers but Bankers to the common man. The confidence that no bank will elope with any depositor’s money has made the common man continually put their trust in the CBN. Is the CBN ready to allow this confidence to vanish should the common man lose value on e-naira?




On the part of the proponents, I have read that e-naira would make life easy for owners and have no element of risk. Yes! I agree that this should be the case. The CBN should be involved in what will not cause sleepless nights for owners. Many claim that the e-Naira is a mere means of payment; a cash alternative devoid of any trappings of crypto. Individuals can hold wallets with the CBN. But of importance to the populace is what becomes of the balance in the wallet? Is it going to be subjected to the forces of demand and supply to modulate the value or be available for transactional purposes?

Many people have become rich through the speculative and volatile nature of cryptocurrencies. Some people claim to have invested one hundred dollars and today have balances of over three hundred thousand dollars within the last few years. The e-Naira does not have this attribute. I urge the FG to use local realities to solve local problems.

But for the reasons above, the idea of a digital currency is brilliant and welcome. Why we applaud and emulate other countries for doing the same, the peculiarity of our system should drive us to a more innovative alternative.

The FG should not downplay the issue of Trust. It is going to be the key survival indicator for the e-naira. If the government must get involved in crypto, I suggest they create a different industry that will accommodate all the razzmatazz, adrenalin rush etc and separate it from the conventional banking activities.


The eNaira is issued by the central bank. If you own the currency, it becomes an asset to you and a liability to the CBN. It is legal tender. Therefore, you can trade and invest with it. It makes transaction costs cheaper and encourages borderless transactions. Digital currency is another way the CBN tends to push for its cashless policy. Meaning of eNaira and key Explanations



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