Integrate MNOs, plug into diaspora remittances, boost eNaira adoption

By Alexander Chiejina.

Since the launch of the eNaira, Nigeria’s central bank digital currency (CBDC), on October 25, 2021, the digital version of the Naira, which leverages the power of blockchain technology, the same technology on which cryptocurrencies such as bitcoin, Ether, Litecoin, and others are built, and serves as a medium of exchange, has yet to gain full adoption by Nigerians in all walks of life.

While cash payments continue to outnumber digital payments in Nigeria, most transactions in the informal economy are conducted with cash. The attempt to encourage the adoption of the eNaira by redesigning the Naira was deemed moderately unsuccessful.

According to DataReportal, Nigeria had 122.5 million internet users at the beginning of 2023, while 193.9 million cellular mobile connections were active in Nigeria in early 2023, accounting for 87.7 percent of the entire population.

Data from the Nigeria Inter-Bank Settlement System Plc (NIBSS) show that both merchants and retail customers are not adopting the eNaira as expected, with only about 1% of active bank accounts in Nigeria.

As a result, experts feel that connecting the eNaira to diaspora remittances via International Money Transfer Operators (IMTOs) and integrating mobile money operators (MMOs) with the eNaira are vital to its success.

Senator Ihenyen, lead partner at Infusion Lawyers, stated that the Central Bank of Nigeria requires the support of mobile money operators (MMOs) in order to strengthen the eNaira project.

“It is critical to key mobile money operators, as well as other relevant players and stakeholders in and outside the payment space. MMOs should be able to have their apps interface effortlessly with the eNaira platform by using Application Programming Interface (API), which should be widely available on the eNaira website,” Ihenyen remarked.

He also stated that plugging the eNaira to diaspora remittances through International Money Transfer Operators (IMTOs) is critical to increasing eNaira adoption.

Whether eNaira remittances are enabled by merchant wallets or API, the CBN and IMTOs must assure the safety and security of their platforms. The nature and amount of AML/CFT compliance, transaction limits balance, and other associated measures all play a role here. Beyond disclosing the operational framework to IMTOs and the general public, the CBN should engage IMTOs, solicit comments, and continue to strengthen the functioning of eNaira as a payment option for diaspora remittances to Nigeria.

Olugbenga Odeyemi, senior partner at e86 Limited, said that the existing digital gap would have an impact on the adoption of eNaira. He stated that folks living in rural areas require more than just Internet and Internet-enabled phones, as many are still battling with poverty, inflation, and unemployment.

“I agree that the lack of Internet and smartphone devices, among other things, will have an impact on the adoption of eNaira,” Odeyemi remarked, but added: “I believe that the use of USSD will promote adoption, but people in rural regions will likely require more than simply the Internet and Internet-enabled gadgets.”

A preliminary examination of the eNaira reveals that, unlike the popular public crypto projects, eNaira nodes will only be maintained by the Central Bank of Nigeria (CBN) and its trusted parties. Wallet apps will then connect to these nodes to interact with the blockchain network, while the nodes will be utilised to maintain the blockchain protocol, verifying new blocks and processing transactions.

While the journey to eNaira adoption continues, the Federal Ministry of Communications and Digital Economy reported in an appendix to its ‘Nigerian National Broadband Plan 2020-2025’ paper that 31.156 million Nigerians resided in areas with no communications connectivity. The ministry defined unserved regions as areas with no service provider coverage.