e-Naira: What You Should Know About the Central Bank Digital Currency

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Nigeria became the first country to adopt a Digital Currency in Africa when on October 25, 2021 the Federal Government launched the e-Naira.

Among the many benefits, the CBN hopes to expand the level of financial inclusion with the e-Naira. To achieve this goal, the apex bank has created windows for people who has bank account and those who don’t have bank accounts to create and use the e-Naira wallets.

In this blog post, we attempt to answer some of the questions our readers are asking. Questions like What is e-Naira? Is it a crypto coin? What are its benefits? Why should I have it?

If you are also asking some of these questions, or you wish to know more about the CBN e-Naira, then read on.

What Is e-Naira

The e-Naira is a Central Bank Digital Currency (CBDC). It is the virtual or online version of the Nigeria Naira (NGN). And it’s a legal tender within the Nigeria jurisdiction just as the Naira.

Thus, instead of paying physical cash when you buy goods and services anywhere in Nigeria, online or offline you can make payment with the e-Naira digital currency.

The e-Naira exchanges at the same value as the fiat Naira. Thus, both the digital and fiat versions of the Naira have equal value.

What is a Digital Currency

Digital currency is money that is in electronic form. It is not in the form of physical notes and coins, hence cannot be seen, felt or touched. But you can use it to settle financial obligations, pay for goods and services and/or receive payment.

Thus, it can be a unit of account and medium of exchange for daily transactions. Settling daily transactions via digital currency is primarily in the form of online transfers.

The evolution of digital currency is a natural response to the wider development in technology and growth in digital commerce. Efforts at digitizing money has been on as early as 1989 when David Chaum started DigiCash in Amsterdam.  DigiCash was the vehicle Chaum founded to commercialize his 1983 research paper on digital money.

However, e-Gold, widely known as internet money was the first successful effort at digital currency. Introduced in 1996, e-gold grew in popularity with over 5 million users around the world. By 2009, e-gold was processing about US$2 billion transaction annually before it was shut down by the US government.

Forms of Digital Currency

We can easily identify three main types of digital currency: virtual currency, cryptocurrency and Central Bank digital currency (CBDC).

Virtual Currency

Virtual currency is an electronic money usually developed and issued by private entities and is only available for use within a restricted community.  It’s not a legal tender in any jurisdiction because a virtual currency doesn’t have all the characteristics of real money.

They are merely a digital representation of real money to facilitate exchanges within an online community.  An example is as used in interactive online game environment.


Cryptocurrency is the most popular form of digital currency.

Starting with Bitcoin in what seemed to be a mere experiment in 2009 by an obscure computer scientist, Satoshi Nakamoto; cryptocurrency has grown to become a popular financial asset class.

In just under a decade the number of crypto coins grew from one to over 2000 and still counting. Even global entities that doubted the future of crypto currencies, are now investing in the space and mining their own coins.

Thus crypto currency is fast becoming a preferred asset class among high profile investors. It’s also fast developing the potential of taking a central place in the global payment system.

Cryptocurrency is based on the block chain technology, is decentralized and independent of any body, not even a centralized monetary authority.

This means that cryptocurrency is not integrated with the economy of any nation. Thus, even if the economy crashes, this digital currency remains valuable.

These attributes are what give cryptocurrency the potential of becoming a global medium of exchange in a rapidly growing digital economy. However, there are concerns that cryptocurrencies are very volatile and lack government backing.

Central Bank Digital Currency

Central Bank Digital Currency or CBDC for short, is the electronic version of a country’s original currency.  The Central Bank of a country issues it and it has a universal accessibility.  Thus, citizens can use it to make payments and store value.

CBDC is created using the same underlying distributed ledger as cryptocurrency.  And by having the backing of the central monetary authority, it overcomes the concerns that is associated with cryptocurrency.

The central banks of many countries are now working on developing their CBDC because of the importance of digital money in the modern economy.

Is the e-Naira a crypto currency?

No.  Not in that strict sense.

Rather the e-Naira and cryptocurrency are both digital currencies.  However, CBDC’s (Central Bank Digital Currency) of which the e-Naira is one, are more reliable than cryptocurrencies because they have government backing.

However, being a CBDC, the e-Naira value is subject to the vagaries of the domestic economy just like the Naira.

Before Nigeria, some other countries have experimented the CBDC.  Some of these countries are China’s Digital Yaun, Sweden’s e-Krona, Bahama’s Sand Dollar, Eastern Caribean Are DXDC.

More countries may likely adopt the CBDC in no distant time.  However many more are cautious.  Transactions on decentralized block chain is irrevocable.  This is one of the concerns against the wholesale adoption of CBDC.

Why CBN Introduced the e-Naira

We have mentioned in earlier paragraph that the CBN is hoping to use the e-Naira to bridge the financial inclusion gap in Nigeria.  Financial inclusion means getting more people to use the services of financial institutions.

But beyond this, the implementation of the digital currency provides a lot of benefits over the fiat currency.  It’s cheaper because there is no need for printing and maintenance as is the case with bank notes and coins.

For instance, CBN reported that it spent N58.6 billion in 2020 to print about 2.8 billion currency note. In 2019, it was even higher at N75 billion. When e-Naira is firmly adopted for commercial transactions, this cost will likely reduce drastically.

Also, since digital currency eliminates third party, cost of transactions will also reduce.

It’s a more efficient, safe and reliable means of payment.  The Central Bank of Nigeria believes that the use of e-Naira will make monetary policy more effective and strengthen the capacity of government in its targeted social intervention efforts.

How Does the e-Naira Work

The central issuing authority is the Central Bank of Nigeria.  The CBN provides the digital money for the banks.  The banks thereafter supply to their customers and other individuals.

The Banks takes responsibility for Identity verification and other kyc matters as well as for generating e-wallets for their users and processing payment.

Creating Your e-Naira Wallet

To create your e-Naira Wallet only takes a few simple steps:

  • Download the e-Naira app from the Google Play Store or Apple Store
  • Select your bank
  • Enter your personal details as required.  This include:
    • National Identity Number
    • Bank Verification Number
    • Date of Birth
    • Email

These details must be the same as are in your regular bank details.  And you are ready to move money from your bank account to your e-Naira Wallet.  Thereafter start transacting with your e-Naira.

You can send, receive money and make payment from your e-Naira wallet just like you do with bank’s mobile app.  However, the e-Naira wallet offers speed, safety and simplicity of transaction.

Final Words

The e-Naira is a Central Bank Digital Currency. It is a legal tender in Nigeria and has equal value with the Naira.  It’s adoption is beneficial to both the monetary authorities, government, businesses and individuals.

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Buchi creates content and leads the Team at Stalwart Investment Partners; a business development and investment consultancy firm. He provides strategic advisory to help SME's, small business owners and HNI's grow profitable business and make informed investing decisions.


Buchi creates content and leads the Team at Stalwart Investment Partners; a business development and investment consultancy firm. He provides strategic advisory to help SME's, small business owners and HNI's grow profitable business and make informed investing decisions.

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