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Monday, November 29, 2021

eNaira and Nigeria’s Economy

NIGERIA has joined the league of nations with crypto currencies with the launch of the eNaira. The Central Bank of Nigeria, CBN, had explained that the eNaira would serve as a medium of exchange and a store of value. By implication, it is a move in the direction of ensuring a cashless economy, even for the unbanked Nigerians. Given the recent explanations of the high cost of minting our devalued paper Naira, THE HOPE views this economic innovation as a step in the right direction.
JUDGING by the visions behind the creation of the digital currency that “eNaira was minted with your expectations in mind, we understand our customers are real people whose needs are constantly evolving so our approach to delivering tailored solutions needs to constantly evolve. From functionality, call to action, to user interface, our goal has always been to deliver an exceptional digital experience tailored to your needs”, and also the theoretical explanations of it fostering economic growth, providing a cheaper diaspora remittance, preventing illicit or fraudulent usage and ensuring a faster and more effective distribution of government’s social welfare funds to the needy and vulnerable Nigerians also informs our appreciation of the fact that the Nigerian government is at this time, thinking beyond rhetoric, and putting actions to plans of making the nation more business friendly.
HOWEVER, we are quick to observe that unlike the cryptocurrencies that seemingly lacks territorial boundary, our digital currency is technically not. By implications, the nation’s digital currency is still limited in its use, as more of a local currency than a global currency. That being the case, the demand for the eNaira is expected to be lower than the bitcoins that increases in value in minutes.
This observation is also corroborated by the fact that the digital currency launched by the CBN attracts no interest. This singular restriction makes it no better than the monies kept in banks, whose meagre interests are wiped off by bogus bank charges. Being a local currency, and more of payment platform, the eNaira is not immune against the devaluations of the Naira, and thus a reduction of its purchasing power. Given that therefore, the eNaira, apart from creating accessibility to the unbanked, and reduction of the cost of minting notes may not compete favourably with Cryptocurrencies and in effect may still be hindered from giving Nigeria(ns) the expected economic turnarounds.
GIVEN this, the only selling point of the eNaira seems to be cashless transactions within the country. On this point, The Hope is of the opinion that Government should therefore focus on increasing the purchasing power of the Naira in order to ensure that the eNaira attracts high levels of demand. Experience has also shown that due to the nature of internet connectivity in Nigeria, fraud and of course limited knowledge, transactions with debit cards as payment platforms have not attained the expected levels of acceptance and usage. Furthermore, the rate at which kidnappers, and robbers force people to part with funds through the POS machines, without traces and arrests puts questions on the minds of Nigerians as to the ‘safety’ of savings on the eNaira.
THIS therefore, and also given Government’s monitoring of bank and cryptocurrency accounts, and subsequent blockage of people’s accounts in recent times, Nigerians may find it hard to trust the sincerity of Government in giving Nigerians such platforms without a hidden agenda. Over the years, Nigerians have lost trust for people in power. Many promises of the good life by many governments have turned around to become noise of hardship in the long run, how we sincerely hope that this digital currency would not suffer the same fate.
THE present Nigeria government and subsequent ones therefore need to work hard on their trust issues in order to attract followership that would lead to the economic revamping of the nation. Also, in line with this, is the need to restore trust to the nation’s currency. This can be achieved through recalibration, creation of infrastructures that boosts economic development; attraction of foreign industries into the country; productive engagement of the unemployed and attraction of foreign direct capital. To this end therefore, The Hope remains adamant that which makes all these impossible, that is, corruption is still being handled with kid’s gloves in Nigeria. Until the nation destroys corruption and its disciples, various economic innovations would continue to exist as mere models on the nation’s drawing board.

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