eNaira CBDC set for cross-border and wholesale use-case upgrade

Nigeria’s National Information Technology Development Agency (NITDA) and the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN) held a policy dialogue on the theme “Driving Sustainable Economic Growth and Development through the Adoption of Blockchain Technology.” 

Some blockchain stakeholders in attendance included Adeolu Fadele, the product manager of eNaira, Nigeria’s central bank digital currency (CBDC); Ayodele Bakare, the head of the digital technology development division of NITDA; Adedeji Owonibi, founder and COO of Convexity; and Suleiman Garba, founder of Sutraq Technologies Limited. 

Here are five key insights from the discussion.  

CBN is set to upgrade the eNaira to support cross-border and wholesale uses

Speaking during a panel session dubbed “Improving the blockchain regulatory landscape for effective financial inclusion,” Fadele explained that the Central Bank of Nigeria (CBN) opted to launch eNaira as a retail payment system rather than wholesale because of the peculiarities of the Nigerian economy.

According to him, emerging economies tend to focus on retail CBDC use cases, while advanced economies generally favor wholesale CBDCs.  

He said:  

“Most of the emerging economies are focusing on the retail CBDCs because there are opportunities to leapfrog some infrastructural challenges, and CBDCs can help us with that.”  

However, he added that the CBN is now working on a new version of the CBDC that will support wholesale and cross-border use cases.

“The good news is that the eNaira is about to implement the wholesale and the cross border [versions]. There have been a lot of pilots behind the scenes, but going live is a different thing.”  

Be smart: Wholesale CBDC is a digital currency issued by a central bank for big financial players like banks to use in large transactions and settlements. It’s separate from digital cash for everyday individuals.

Regulators need to be well-educated on blockchain to protect consumers 

For his part, Owonibi, who is also a blockchain consultant for the CBN and the Economic Financial Crimes Commission (EFCC), highlighted some challenges within the blockchain regulatory landscape.

He said regulators need more blockchain education to regulate effectively. He also addressed the cases of law enforcement agents harassing workers in the blockchain space because they do not know how to distinguish between criminals and legitimate businesses.

He said: 

“You cannot stay away [from the blockchain space] without regulating, and for regulators to be able to be able to control, they must be educated and understand what’s happening. 

“So a case in point, we felt because we think regulation is very critical, we decided [to do] pro bono [training for] the EFCC officials … We went, we trained them, and now they can separate the [frauds] from the normal guys, and now they are confiscating assets.”  

Blockchain innovators should engage with regulators on the technology.

Sutraq’s Garba stressed the importance of blockchain innovators and experts engaging with regulators to demonstrate the technology’s capabilities.  

He also encouraged innovators and regulators to look past the misconceptions about each other — misconceptions stifling innovation and inhibiting widespread blockchain adoption in Nigeria.  

He said:  

“Engagement with the regulators, [and] trying to show them what the technology does, is key as a strategy. Globally, ... the regulators are expected to be technology-neutral. In the sense that they are not keen about the technology, they are looking at what the technology does – which is financial services.”  

An eNaira-pegged stablecoin is in the works.

Although Nigerians can already receive diaspora remittances in eNaira, it is yet to become an option for sending money outside the country. Owonibi disclosed that an eNaira-pegged stablecoin is in the works, adding that his organization is the technology provider behind it.

He said:  

“The eNaira has gone very far, and a lot is happening. We’re working on a stablecoin solution that will power the Nigerian economy. We started building a Nigerian eNaira-pegged stablecoin two years ago, and we refused to bring it to the domain because we [needed] to work with regulators …

“Now [we have] a consortium eNaira pegged stablecoin that you will soon see on your exchanges for cross border, international and local transactions in a few months to come.”