Introduction
After the launch of Nigeria’s new digital currency tagged the eNaira on Monday, 25th October 2021 by President Muhammadu Buhari, I jumped onto the eNaira wagon and here is what I found in the early days.
1. The eNaira Speed Wallet missing in playstore – On Thursday, 28th October 2021, three days after the launch of eNaira, I accessed Google playstore to download the eNaira Speed Wallet for individual account holders but did not find it in playstore. It was reported that due to negative feedback/ratings, the app was taken down. If these reports are true, the Central Bank of Nigeria (CBN) must install mitigating factors to avoid a repeat of the app outage on playstore in the future. I was however able to download and install successfully the eNaira Speed Merchant which is the eNaira app for businesses!
2. Accounting Verification Unending – Almost a week after I successfully registered a Merchant account with the eNaira Speed Merchant app, the status remains – Your account is being verified. Your information has been submitted and your application is under review. Once approved the app functionality will be enabled. Until then you can preview the app. If the eNaira is meant to be legal tender meaning once tendered to merchants they cannot refuse it, what are merchants expected to do if account verification is taking over a week and yet not successful. Will the business be kept on hold pending account verification? The CBN must install processes to verify accounts almost instantly. It is the only way eNaira can become embedded as legal tender otherwise the current situation where account verification is taking longer than a week, cannot support legal tender status for eNaira.
3. Cash Withdrawal – on the Exchange page on the eNaira Speed Merchant app, there is a functionality to – Load Digital Wallet where the Merchant exchanges eNaira for the customer and receives cash. This function is understandable because the merchant is converting the traditional naira into eNaira. But inexplicably there is also another function on the page for – Cash Withdrawal where the merchant exchanges cash for the customer and receives eNaira. This is confusing because the initial design documents earlier released by the CBN stated that once the traditional naira was converted to eNaira, it will not be reconverted to cash again and this was the main selling point of the eNaira that it was to deepen digital transactions and reduce the volume of cash in circulation thus to save costs on printing of currency. If the eNaira can now be cashed as the functionality on the app suggests, then what is the difference between the eNaira and the balances we currently hold in our bank accounts which we can also cash at ATMs, bank withdrawal forms or at the POS operators scattered around in our neighbourhoods?
4. Discounting the eNaira – the question is how are merchants expected to benefit from exchanging eNaira for customers either by receiving cash and loading eNaira wallets or by receiving eNaira and offering cash to customers? It is not clear how the merchants will benefit from these transactions which leads to the possibility that merchants will begin discounting the eNaira. This means for example if workers are paid salaries in eNaira, they will have to suffer a loss to convert it to cash. E.g., if a worker gives a merchant eNaira 1,000, it will be discounted by the merchant and the worker gets say N900 cash. Automatically this becomes a pay cut on the side of the worker and only the worker stands to lose in the transaction.
5. Foreign transactions – it is unclear how the foreign transactions with the eNaira app will be executed. For example, if an importer is paying for goods with eNaira to a supplier in London, the supplier will flatly refuse the traditional Naira because it is not a convertible currency. But the CBN says the supplier will accept the eNaira which is doubtful but let’s now deal with the practicalities assuming but not conceding that the supplier magically agrees to accept the eNaira for his goods. Since eNaira is transferred from wallet to wallet only, how can the Nigerian importer transfer eNaira to the supplier in London? Will the supplier have to download the eNaira app? If so, how will he get a BVN and Nigeria’s TIN and bank account number to be able to complete his registration? When I registered a merchant eNaira account, these things were demanded?
Now let’s assume the supplier magically was able to provide the above details, activated his wallet and the Nigerian importer transferred eN1m to him, what will the supplier in London do with the eNaira they now have in their wallet?
On the other hand, assuming it was a Bureau De Change (BDC) that a Nigerian traveller offered eNaira to in London. Will the BDC transfer the GBP equivalent to Nigerian’s wallet? If so which wallet? Because our eNaira wallet will accept only eNaira and not GBP.
If the BDC transfers GBP to the Nigerian bank account or hands him cash, then eNaira is no longer eNaira because a true eNaira cannot be cashed! Let us assume that the BDC magically found a way and transferred some eGBP to a GBP wallet, how do the Nigerian spend it in the UK when merchants don’t have such wallets for him to do wallet to wallet transfers?
These are the many questions that trail the CBN’s declaration that with eNaira, foreign trade and payments will become easier as Nigerians can with a click of the button on the eNaira app, transact in eNaira in exchange for foreign currencies. Currently the CBN is only able to allow $100 equivalent spend on naira denominated bank accounts. It remains to be seeing where the CBN starved of petro-dollars by the NNPC will source for the dollars to fund such unrestricted trading of the eNaira for foreign currencies. Unfortunately for the CBN, whilst they can print the naira without control, they cannot print the dollars so cannot give what they don’t have!
6. No email authentication – I noticed during the registration of the eNaira Speed Merchant app that basic security features such as email authentication were not activated. The CBN needs to install appropriate security controls around the app to protect the illegal harvest of user data and unauthorised intruder activities on customer details and balances stored on the eNaira app.
Recommendations
1. The CBN still has a lot of work to do to make the eNaira app usable therefore should not mandate the use of eNaira from day 1 but allow the system to operate in parallel with the current payment channels until the system is assessed and confirmed to be robust enough before it is mandated in a general rollout.
2. To avoid a run on the banks and to maintain deposit liabilities on the banks’ balance sheets to support their loan assets, the CBN should allow the DMBs to be the custodians of the eNaira wallets. This way, if a user transfers funds from their bank accounts to their eNaira wallets, the funds remain with the banks. This will maintain the financial system stability without creating a parallel deposit system in the economy.
Conclusion
The CBN must support the eNaira with prompt customer care to fix bugs and also hasten the activation of accounts if the eNaira is to become embedded as a payment channel in Nigeria. So far, the CBN is doing quite badly as regards the customer support for eNaira especially by not activating accounts created for over a week! The CBN can, should and must do better to support the eNaira to grow!
Leave a Reply