President Muhammadu Buhari introduced the Central Bank Digital Currency (CBDC), also known as the eNaira, on Monday, making Nigeria the first African nation to do so. Around the world, digital currency, like eNaira, is used to promote quick financial inclusion and to create a sustainable payment system.
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During a short ceremony at the Presidential Villa in Abuja, the President said that it is estimated that the adoption of CBDC and its underlying technology, known as the blockchain, could enhance Nigeria’s GDP by US$29 billion over the next ten years. President Buhari believes that the usage of CBDCs may assist shift many more individuals and enterprises from the informal to the formal sectors, therefore expanding the country’s revenue base.
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“Let me note that aside from the global trend to create Digital Currencies, we believe that there are Nigeria-specific benefits that cut across different sectors of and concerns of the economy. The use of CBDCs can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country” he said.
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Buhari stated that the quest to develop a digital currency for Nigeria began in 2017, but that work has escalated in recent months with many brainstorming exercises, engagement of technical partners and advisers, cooperation with the Ministries of Communication and Digital Economy and its sister entities such as the National Communication Commission, integration of banking software throughout the nation, and rigorous testing to assure the robustness, reliability, and scalability of the CBDC System.
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The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, explained that the deployment of the e-Naira came after the completion of preliminary work in which the CBN’s researchers and experts were able to clearly establish that a digital currency will drive a more cashless, inclusive, and digital economy and will complement the gains of previous policy measures and Nigeria’s fast-growing payments platforms. The eNaira, he claims, is the digital equal of the traditional Naira, with considerably more potential.