With the CBN’s launch of the eNaira, most people are left wondering what the difference is between the eNaira and the normal internet banking via mobile apps and USSD codes.
Well, not much difference between them.
In this article, we’ll look at the features that sets the eNaira apart from the normal online banking, and if it is worth adopting for individuals and businesses.
According to the CBN, eNaira is issued and managed directly from the CBN. It is designed to be a “digital form of cash [Naira] and is a direct liability on the Central Bank of Nigeria.”
In contrast, the money in your bank app or wallet is not issued by the CBN. According to the memo, “customer deposits are direct liabilities on their financial institutions.”
So, when you operate an eNaira wallet, it is just as if you have opened a bank account directly with the CBN.
Hmmm…This is a sign that the CBN wants to take the bull by the horn and is looking to have more control over financial transactions in Nigeria. A good sign? A bad sign?
eNaira has no Intermediaries
Since the eNaira is issued and managed by the CBN, there are no Intermediaries like you would have in a banking transaction. So, the eNaira would work in a sort of P2P model.
This means, there would be no dispensing errors or reconciliation issues for transactions, as it would be structured to be end-to-end.
eNaira would facilitate ease of Tax Collection
Now, it is getting clearer why the CBN needs to have some control over financial transactions going on in the country.
According to the CBN, the eNaira would create “ease in tax remittance and collection to support the country’s growth.”
So, one of the goals of the eNaira is to make every legal citizen of Nigeria to be tax compliant.
The eNaira facilitates Faster and Direct Remittances
Do you often receive foreign remittances from friends and family abroad?
If yes, the eNaira wants to help you receive those remittances faster and without any intermediary.
So, the sender would simply get the eNaira wallet, fund the wallet, and transfer funds to you.
But come to think of it, what about the exchange rate involved with foreign remittances?
How would the sender fund their eNaira wallet from a foreign country? Will the CBN operate a parallel Forex market on the eNaira wallet? Or would they allow merchants to conduct Forex transactions in this case?
Well, maybe we need more info here. But in my experience, most Nigerians receiving foreign remittances would prefer to collect the foreign currency and exchange it to Naira themselves.
I don’t see how allowing the CBN to have control over my Forex remittance helps me in any way.
And I believe many people are thinking in the same way.
The eNaira comes with low Charges
Hmmm…yet another charge on transactions.
At a time when we are beginning to adopt Fintech apps with zero banking charges, the CBN comes with yet another avenue for charging us.
With apps like Kudabank and Branch, banking customers in Nigeria have breathed a sigh of relief. So, why should we go back to the old ways?
I, for one, knows I’m not going to use another app that charges me to send money to another customer on the same app.
The eNaira is not a Cryptocurrency
Contrary to what many people believe, the eNaira is not a cryptocurrency. It is a digital currency and there is a huge difference between both.
A digital currency represents an electronic form of fiat money issued by governments, whereas a cryptocurrency is a store of value secured by encryption.
The eNaira is just a digital representation of the Naira. According to the CBN, 1eNaira = 1Naira.
So, there is no store of value with the eNaira. The eNaira helps the CBN efficiently implement its monetary policies, and this is actually a novel move by the CBN to solve the many problems it has been encountering in recent years.
But I don’t see much difference on how it would help the users other than what the banks are already doing.
The eNaira wallet can be opened and operated via a mobile app and a USSD code just like the modus operandi of internet banking.
We’ll only have to continue looking for the opportunity or leverage that the eNaira brings.
Maybe there’s a digital advantage somewhere. Or maybe not.