Irrespective of its shape or form, money has been part of human history for about 3,000 years. It serves as a medium of exchange, store of value, and a unit of account. Over the millennia, humans have experimented with different forms of money based on the technological and economic circumstances of their time. In those days, payment systems ranged from bartering to the use of gold; now we trade with government-issued coins and paper assets, such as cheques and currencies.
Interestingly, the evolution of money has not stopped with the advent of fiat currency or paper money. With ongoing technological advancements, pundits believe that the future of money is indeed digital, with fiats being upstaged by digital currencies. Given the current preoccupation of world leaders with the Central Bank Digital Currencies (CBDC), this assertion might be closer to the truth.
With the launch of Nigeria’s eNaira, the concept of a central bank digital currency has moved beyond an idea to the implementation stage. I recently published a guide on the use of the eNaira in a bid to alleviate the concerns of cautious Nigerians who need clarifications before jumping on the eNaira bandwagon. I concluded the piece on the note that there would be a follow-up article where I intend to explore the possibility of the eNaira becoming a world-class digital currency as well as draw attention to the impact of private-public sector collaboration in driving Nigeria’s vibrant financial sector forward.
While I won’t go as far as calling citizens’ interest in the eNaira overwhelming, the digital currency is witnessing gradual uptake despite its rocky start and one-time disappearance. To be fair, I think any project of that magnitude that involves integrating dozens of banks and all their accounts while maintaining the highest security levels may not work perfectly initially.
However, the chances of major glitches will be slim if the government keeps fixing the little things and gradually expand the eNaira further. After all, the tagline implies that with the eNaira comes more possibilities.
Against this backdrop, I’ll like to emphasise that the successful running of the eNaira will depend on the government’s willingness to engage with local innovators in the fintech space. Nigeria has the potential to be bold, creative, progressive, capable of continental, and even global leadership if driven by digital technology. Already, the country is home to Africa’s best and brightest minds in the e-payment business; the likes of Remita, Paystack and Opay among other fintech disruptors.
Without earning a good measure of trust from their users, these companies would not have had the well-deserved recognition both nationally and internationally today. As funny as it is, many people trust fintech companies over government-backed financial institutions. By working with these young men on the eNaira project, the government will be showing itself transparent to citizens who have long viewed the system with distrust and cynicism.
The government needs to demonstrate that the eNaira is more about catering to the needs of Nigerians than a desire to make money or get their data. To that end, engaging with the private sector might well disabuse Nigerians of the notion that the eNaira is the government’s means to exploit them financially.
One of the pain points of using Nigerian banks is their tendency to overcharge customers. Sometimes, users’ accounts get deducted for no reason at all. This continues to erode trust in traditional banking, causing citizens to patronise young and ambitious fintech platforms. Hence, the Central Bank of Nigeria needs to be smart about any fees it charges users of the eNaira.
There is no doubt that technology has a nearly limitless capacity to enrich our lives and change the world. To realise its full potential, it must be built on a strong foundation of security and trust. This is especially true when it comes to digital currencies considering that they are susceptible to hacks.
To provide best-in-class product security assurance, technology providers operating within the electronic money axis are investing in secure development practices, emerging threat research, tool and methodology path-finding, security incident handling, and continuous education for their employees.
Since we cannot shy away from the issue of security, the CBN needs to be very cautious with the monitoring functionality as criminals take advantage of any vulnerability they detect. The CBN can look within the country to scout for ambitious fintech platforms to partner with to deliver world-class services through the eNaira.
Nigeria remains the first country in Africa and one of the first in the world to introduce digital currency. Currently, the eNaira is accessible only to people who have Nigerian bank accounts. Though interested, non-Nigerians without a Nigerian bank account can’t use the service. This shows that the eNaira should not be limited to Nigerians alone.
Recently, I had a conversation with Christian Keller, the CEO of African Founders, an early-stage Internet holding active in Sub-Saharan Africa. Though European, he’s always been passionate about Africa and has lived in Nigeria for more than six years. When asked about his experience with the eNaira, he revealed that he had been unable to access the application.
“I don’t know enough details to assess it. I can’t use it. I have to select a “State of Origin” which has to match the state of origin that my bank has stored which they apparently don’t have,” he told me.
His response struck me as funny but not in a good way. This is someone who has been in Nigeria for almost 10 years. If he can use physical naira, I see no reason why he shouldn’t be able to use eNaira. While the CBN is busy campaigning for everyone to adopt the eNaira, it’s not making a case for foreigners who live and work in Nigeria and yet cannot use the digital currency.
Digital payment will definitely be the future and people. For those two reasons, there is a need to make it easy for people to sign up for the eNaira especially travellers and business partners at home and abroad. I believe that if things follow the right direction, the digital currency could expand beyond Africa to the global space.
ICT Clinic by CFA is published weekly in the Sunday Punch