With the world moving towards globalization and complete advancement in digital and technological activities, Nigeria has successfully found a space for its incremental innovation. Nigeria has recently become the first country in Africa to launch its own Central Bank Digital Currency (CBDC); also referred to as the “eNaira”. It joins the Bahamas and the Eastern Caribbean Central Bank in being among the first jurisdictions in the world to roll out national digital currencies. With this new development, it seems confident that the country is gearing towards a financial breakthrough.
The Evolution of Nigerian Monetary System
Supposedly, the financial landscape of Nigeria is not static. There has been a constant evolution of new services and products; periodically introduced to change the various ways Nigerians interact with financial institutions including, monetary and payment systems. Before now, Automated Teller Machines (ATMs) and Point of Sale (POS) were new and innovative. Today, Nigerians who own bank accounts possess debit and credit cards that enable them to move around without cash and use ATMs and POS terminals. With the creation of the Nigerian Interbank Settlement System (NIBSS), which serves as the central switch for Nigeria, the introduction of internet banking helps Nigerians to effortlessly transfer money to another customer within minutes rather than standing in long queues at banks for the same objective.
Subsequently, the introduction of mobile banking and mobile money came along, making banking processes less cumbersome. These payment systems and methods now function as fundamental supports for payment infrastructure in Nigeria. Moreover, the Central Bank of Nigeria (CBN) seems to create other payment and financial extensions to complement existing economic systems. It is accomplished through the establishment of its digital currency called the eNaira.
The Advent/Unveiling of the eNaira

President Muhammadu Buhari, on 25th October 2021, unveiled the eNaira at the State House in Abuja. In his speech during the occasion, he expressed his delight to “officially launch the Central Bank of Nigeria Digital Currency called the eNaira. And in so doing, we have become the first country in Africa and one of the first in the world to introduce a digital currency to our citizens”.
Before the launch date, the Director of Communications of the Central Bank of Nigeria, Osita Nwasinobi, said that the eNaira “marks a major step forward in the evolution of money and the CBN is committed to ensuring that the eNaira, like the physical Naira, is accessible by everyone…”. As part of its feature, the eNaira would increase remittances, foster cross-border trading, improve financial inclusion and enable the government to make welfare payments easily. Alongside innovation, adopting a CBDC will enhance economic activities and hopefully increase Nigeria’s GDP by 29billion dollars in the next ten years.
What is the eNaira?
The eNaira signifies a digit(al) and electronic representative of the paper Naira issued by the Central Bank of Nigeria (CBN). The eNaira was developed by the fintech company Bitt based in the Caribbean, and in essence, a direct liability of the Nigerian apex bank (CBN). It is a currency built on a blockchain open ledger technology that prevents (re)duplication or eventual creation of fake units. It is also unique and significantly different. In addition, the eNaira is a complementary legal tender in Nigeria, having an equivalent exchange rate/value as Naira, and will maintain a “parity of value” with the paper Naira. It eases transactions and offers digital stability. Thus, it reduces the need for physical cash.
For clarification, the eNaira is not the same as cryptocurrencies. Unlike Bitcoin and its sister currencies, the eNaira is a legal tender that has the backing of established authorities in Nigeria. Because it pegs against the traditional Naira, it will not fluctuate due to market influence at different rates. Also, because it is a legal tender, it forms part of the currency-in-circulation. The eNaira is also at par with the physical Naira. It means that it maintains an equivalent exchange rate/value as the paper Naira; that is, ₦1 = 1eNaira.
The eNaira as a CBDC

What exactly is CBDC? CBDC stands for Central Bank Digital Currency. According to Mondaq, CBDC is “a digital form of central bank money that is different from balances in traditional reserves or settlement accounts”. It serves as a digital payment instrument denominated in the national unit of account that is a direct liability of the central bank. The eNaira has the backing off the central bank, an institution that controls the financial system. It makes the currency a digital iteration of the paper Naira. As a CBDC, the eNaira solves verification risks by assuring individual holders that the digital currency is a valid token. It also has some significant benefits, which include:
- It aids financial inclusion;
- eNaira facilitates and boosts inbound remittances – a more secure and faster way for Nigerians in the diaspora to send back the money;
- It facilitates transparency and regulates currency transactions to curb black-market trading;
- Also, it reduces “leakages” that emanate from state budgets due to in-built traceability that uses blockchain technology;
- It improves the efficiency of cross-border payments; and
- eNaira reduces the cost of processing cash.
CBDCs versus Cryptocurrencies: Major Differences

Notably, there are main differences between Central Bank Digital Currencies (CBDCs) and Cryptocurrencies. One of these differences is that, while CBDCs are issued by a unified authority, and have the backing of proficient financial institutions, cryptocurrencies, such as Bitcoin, are built on blockchain technology. According to The Conversation, blockchain is a system of keeping records of transactions across a network of computers. It ensures the decentralization of the creation, regulation and use of decentralized computer networks.
Another main difference is that cryptocurrencies are only secured by cryptography. Cryptography is a form of communication that makes it difficult for third parties or fraudsters to obtain information about such communication; thus making cryptocurrencies largely anonymous. On the other hand, CBDCs use digital ledgers, storing transactions and recording(s) on a digital storage infrastructure. They are (or maybe) made anonymous by the issuing entity and are best described as digital assets or crypto-assets. The introduction of the eNaira enables peer-to-peer payments, cutting out intermediaries such as financial institutions.
When properly implemented, the eNaira could assist the CBN with its financial inclusion target of 80% of Nigerians. It could also create breathing space for financial systems and help mitigate the inherent risks of CBDCs. Meanwhile, the CBN needs to continually deepen its knowledge with new technologies that aid and support digital currencies. It should also commence the introduction of necessary infrastructures that will aid the smooth utilization of the eNaira in Nigeria.