E-naira, Nigeria’s proposed digital currency is currently being promoted as a welcome boost to ongoing efforts of the Buhari administration to reduce the number of the citizenry that are financially excluded.
President of Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), Senator Ihenyen, however says the success of such a digital currency will depend on its design.
Central Bank of Nigeria (CBN) is proposing a digital currency, whose piloting phase is set to commence on October 1. Those who tend to know better say it will be a hybrid Central Bank Digital Currency (CBDC).
This implies that the e-naira will be combining both retail and wholesale capabilities. This, according to the SIBAN chief, means the issuing of the e-naira will not be disruptive to the operations of intermediaries such as banks and other financial institutions.
Ihenyen told a digital currency platform that he does not think the e-naira, which will be a digital version of the fiat currency, “comes with a magic wand.”
According to him, ‘’as long as the e-naira is a digital version of the naira, it comes with no magic wand. At best, it will make cross-border transactions and remittances cheaper and easier—two critical areas Nigeria needs to improve. So, Nigeria must fix the economy. We must get the fundamentals right.’’
The apex bank has been regularly signalling its desire to bring a CBDC into the Nigerian economy since it directed banks to stop serving crypto entities back in February.
Some analysts are suggesting that the central bank has resorted to a strategy where it allegedly stifles crypto trading while promoting the e-naira. Perhaps, the objective is of this plan is to see the e-naira overtaking bitcoin in popularity terms.
But, Ihenyen is expressing doubts about a CBN or any other central bank-issued digital currency ever replacing bitcoin. He cites the very different intentions or objectives of those that created decentralised cryptocurrencies like bitcoin and those pushing for the issuing of CBDCs.
For him, CBDCs and decentralised cryptocurrencies are a world apart, pointing out, ‘’by their nature and by design, they do not serve the same purpose.’’ CBN has however, pointed out that the proposed e-naira will run on a private and permissioned blockchain which will be governed by it.
‘’This is in sharp contrast to the public and permissionless design of bitcoin and many other cryptocurrencies with no central authority. So, it is not really a matter of one replacing the other’’, the SIBAN chief.