Barely 10 days before the launch of the e-naira, the Central Bank has mandated all merchants and business establishments across the country to recognize and accept it as a form of payment. According to the apex bank, the digital currency is a legal tender and must be seen as such.
CBN Director of Payment System Management, Musa Jimoh made this known while speaking on the “Business Morning” show on Channels TV.
According to the director, Mr Jimoh, “Today, anywhere you present naira to pay, compulsorily it must be accepted because that is our fiat currency. So, the same way naira is accepted that you can’t reject it, is the same way e-naira must be accepted. Anywhere in this country where e-naira is presented, it must be accepted. So, merchants must accept e-naira as a means of payment.”
The CBN is expected to launch this digital currency on October 1 to coincide with Nigeria’s 61st Independence Day anniversary. The bank believes that the introduction of this currency will make it easier for the banking system to comply with existing laws and urges Nigerians to download the e-naira wallet on their mobile devices.
Substitute for cryptos?
In February, the CBN issued a directive for banks to shut down accounts suspected to be transacting cryptocurrencies or operating crypto exchanges within their systems. That order basically banned crypto transactions in the country.
Some reasons for the prohibition are that cryptos prevent oversight, accountability, and regulation. The CBN also argued that cryptos don’t generate returns and that they are being used for criminal activities.
Most importantly, the apex bank believes since it didn’t issue the cryptos they, therefore, don’t qualify as legal tender.
“The CBN reiterates that VCs such as Bitcoin, Ripples, Monero, Litecoin, Dogecion, Onecoin, etc, and similar products are not legal tenders in Nigeria, thus any bank or institution that transacts in such businesses does so at its own risk.”
While crypto exchanges were badly hit by the ban, Nigerians on the other hand quickly migrated towards Peer-to-Peer (P2P) transactions and carried on as if nothing happened. This has forced the bank into issuing its own digital currency to be powered by Barbados-based fintech, Bitt.Inc.
The apex bank says that its decision to adopt a form of digital currency is due to the significant explosion in the use of digital currencies as a means of payment globally and the growth of Nigerian youths as leading investors in these novel assets.
But what are the chances that these Nigerian youths would sacrifice stable cryptocurrencies like Bitcoin and Ethereum for the e-Naira? Some of the reasons why Nigerians are flocking towards cryptos include remittances, international transactions, wealth preservation and investment.
But according to the CBN, the e-Naira would be equal in value, and everything else to its cash equivalent.
“The liability of the e-naira money is directly on CBN, which is similar to the cash you hold. The liability of the cash you hold today rests with the CBN. So, it gives Nigerians the opportunity to bank with the CBN,” Mr Musa Jimoh said.
If this is the case, then the e-Naira doesn’t address the core reasons why Nigerians prefer to hold digital currencies in the first place. As such, to the extent that it doesn’t help achieve these purposes, the CBN may not witness the kind of mass adoption it is expecting, at least not for some time.
The CBN director already admitted that acceptance and adoption of the currency will be low on October 1. He is however optimistic that the currency will experience some significant growth with time.