The Central Bank of Nigeria (CBN), in a document sent out to the commercial banks, spelt out the proposed operational tiered model for the eNaira project.
The proposed model described the “hierarchical structure for the CBDC with the central bank at the apex of the pyramid, servicing financial institutions and government agencies that, in turn, provide the digital currency to merchants and retail consumers”.
Furthermore, the proposed model also includes a tiered identity verification model with a transaction cap on each tier.
According to the tiered model, Tier 1 with a daily transaction cap of 50,000 naira (US$120) for the ‘unbanked’ will require a national identity and a verified phone number to qualify.
The Tier 2 and Tier 3 will have a daily transaction cap of 200,000 naira (US$487) and 1 million naira (US$2,438) respectively.
Furthermore, merchants will have a similar cap on their daily transaction to that of the Tier 3.
However, entities will have no restrictive cap on the amount of eNaira they can withdraw on their bank accounts, the CBN document revealed.
The development of the eNaira, which is termed ‘Project Gaint’ experienced four (4) years of continuous development.
The development of the eNaira saw the engagement of the Barbados based fintech BITT Inc. by the CBN on the ‘Project Giant’.
This decision by the CBN welcomed great stakeholder concern from some of Nigeria’s finest economists, financial experts and especially fintech companies, who on their part felt abandoned from the national discourse.
Furthermore, the CBN’s spokesperson, Mr. Osita Nwanisobi, speaking to the International Centre for Investigative Reporting (ICIR), revealed that the CBN followed a due process during the selection of the ideal fintech participant on the ‘Project Giant’.
Additionally, in a press release by the CBN on 30th August, the Bank revealed that BITT Inc. as compared to the other 14 bidders for the contract, has the “technological competence, efficiency, platform security, interoperability, and implementation experience” required on the ‘Project Giant’.
The eNaira comes into effect “at a time when its fiat counterpart has plunged to new lows, with central bank enacting even tighter forex restrictions”.
The insurgence of the eNaira into the Nigerian economy can be envisaged as Nigerian Government’s counter response to the operational activities of “privately-issued stablecoins and cryptocurrencies across the globe”.
Cryptocurrencies and the Nigerian economy
The threat posed by the emergence of Bitcoin (BTC), for instance, in Nigeria’s economy, ranges from “offering easier remittance vehicles especially for the country’s diaspora population in supporting relatives and loved ones back home”.
BTC also offers “a means for the upwardly mobile and tech-savvy younger population to hedge their wealth against the rapid debasement of the naira”.
The CBN in its attempt to correct the negative cryptocurrency sentiments from stakeholders and several government officials, initiated some anti-crypto policies to this effect.
Meanwhile, the CBN has committed prudent measures to expand on the existing scope of financial access with the introduction of the eNaira.
Furthermore, the CBN has reported that “at least a third on Nigeria’s adult population remains unbanked”.
Also, a third of the banks’ verified 47 million account holders, has been reported by the CBN to actively operate their accounts.
In the meantime, just as China recently upgraded its crypto related activities as soon as its digital currency paved its way into the public pilot sphere, the CBN is likely to follow suit, by enacting anti-cryptocurrency laws once the eNaira gets to the public, CBN disclosed.
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