Nigeria on Monday, October 25 became the first country in Africa to launch a Central Bank Digital Currency (CBDC) as it unveiled the eNaira.
Issued and regulated by the monetary authority of a nation, a Central Bank Digital Currency uses an electronic record or digital token to represent the virtual form of a fiat currency of the particular nation. Only 5 countries including China and the Bahamas have so far officially launched CBDCs, but use of technology is being explored and piloted by Central Banks around the world.
Nigeria stated that they were keen on making the eNaira accessible to everyone, describing it as ‘a major step in the evolution of money’. The CBN is, however, particularly keen on reaching the country’s rural and unbanked population with the eNaira.
“The launch of the eNaira is a culmination of several years of research work by the Central Bank of Nigeria in advancing the boundaries of payment systems in order to make financial transactions easier and seamless for every strata of the society,” a statement from the Central Bank of Nigeria read in part.
Among stakeholders who were engaged for the development of the eNaira are members of the banking community, fintech operators, merchants and a cross-section of Nigerians.
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The CBN noted that the eNaira was still in its infancy and would be subject to various modifications and enhancements.
“Since the eNaira is a new product, and amongst the first CBDCs in the world, we have put a structure to promptly address any issue that might arise from the pilot implementation of the Naira,” it stated.
It was launched with the theme ‘Same Naira, More Possibilities’.
Kenya is among African countries whose Central Banks have confirmed ongoing exploration into the development of CBDCs. Others include South Africa, Ghana, Morocco and Egypt.
The East African Community (EAC) is also looking at the possibility of a regional CBDC as a way of enhancing cross-border trade, amid reluctance to trade in foreign currencies with the shared East African Payments System (EAPS).
EAC partner states aim to attain a single currency for the region by 2024 in line with the bloc’s Monetary Union Protocol.
“The consultant will conduct an exploratory scoping of such developments, as well as emerging technologies and their adoption, including but not limited to technologies involving the use of Central Bank Digital Currencies (CBDCs),” a call for consultants to undertake feasibility studies on upgrading the EAPS read in part.
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