existing efforts in the electronic banking sector.
After an initial false start and several technological hitches, the Central Bank of Nigeria finally launched the eNaira on Monday at the State House in the Federal Capital Territory. The occasion was a chance to address the question of the point of the eNaira but the President, Maj. Gen. Muhammadu Buhari (retd.), did not go beyond echoing the same old story. He said the digital naira would increase remittances, foster cross-border trade, improve financial inclusion, make monetary policy more effective, and enable the government to send direct payments to citizens eligible for specific welfare programs. Almost each of those achievements Buhari listed is at least two decades old, thanks to the advent of internet technology and the globalisation of the banking system. In the case of Nigeria – and perhaps most African countries – we also have the influx of relatively cheap China phones to thank for facilitating electronic banking and financial inclusion.
Apart from Buhari’s address, I have also followed several “expert” opinions on the eNaira. While some praised the initiative as a game-changer, none of these enthusiasts pointed out what a digital currency does differently from the electronic transactions people conduct on the internet, banks, cash apps, and POS machines. The fact that we live in a country where a pastor conjured “miracle money” is an indication of liquified fiduciary instruments have become.
Unlike some misinformed assertions in some quarters, the eNaira is not “cryptocurrency.” It is not going to rise in value like bitcoin or similar forms. The eNaira is the same money you currently have in your bank account and which you already transact through bank apps. There is probably nothing you want to do with the eNaira locally and internationally that you probably cannot do already with your ATM card. When it comes to international transactions, the eNaira will face the same hurdles people currently deal with when paying for certain goods and services from Nigeria.
While interrogated during a live TV interview, a CBN director said the eNaira was the beginning of the “march to prosperity” for Nigeria. Unless the CBN has something else they are not telling us yet, the digital currency is not the revolution they are making it out to be. It is a reinvention of the wheel, albeit in a digital format. Making exaggerated claims that the eNaira will lead Nigeria to prosperity is unnecessary and likely to sow distrust in a populace already cynical about the efficiency of our institutions. Countries prosper based on productivity index, not because they created one more means of making payments to compete with existing organisations. It is even problematic that the CBN presents itself as a competitor against other agencies that already deliver the same services effectively. Before you know it, the CBN will make monopolist policies to squeeze the life out of those finance organisations so their eNaira can thrive.
The fact that the CBN currently undersells the potentials of the digital currency by focusing on how it duplicates existing efforts does not make the initiative an entirely useless idea. Countries like China and Sweden also issuing digital currencies – the e-renminbi and the e-krona respectively – have spoken about how electronic money will improve transparency in global financial transactions. Some other countries currently piloting the digital currency project have also focused on how they plan to use the digital currency to curtail money counterfeiting, develop stronger oversight systems to monitor terrorism funding, fight corruption by discouraging shadow transactions, and confront money laundering.
For Nigeria, one would expect the CBN to show how the digital currency can support anti-corruption efforts, and their plans to heighten surveillance of illicit cash transactions regularly conducted in high places. For instance, how will the traceability of eNaira transactions make it harder for the politicians who commandeer a bullion van to their private houses during general elections to do whatever they do with that much money? In the wake of the Panama Papers and Pandora Papers’ exposés of illicit global financial transactions, how do you intensify supervision of international money transfers? Instead, the CBN is selling the most basic functions of e-transactions. So far, nothing they claim the eNaira will achieve departs from the same things garrulous Sanusi Lamido Sanusi said when, as the CBN governor, he was promoting the “cashless society” policy.