The global payments landscape has evolved dramatically over the years, with digital payments now making the exchange of value easier, faster, and more reliable.
Today, Central Bank Digital Currencies (CBDC) represents the latest evolution of digital payments.
Generally, there are two types of Central Bank Digital Currencies – wholesale and retail CBDCs. Wholesale CBDCs are used by financial institutions for large value transactions and settlement purposes, while retail CBDCs are designed to be used by individuals and businesses for making and receiving low value payments.
The Central Bank of Nigeria (CBN) has put its foot into the ring by introducing Africa’s first Central Bank Digital Currency named the eNaira, which is a retail CBDC focused on deepening financial inclusion.
Understanding what the eNaira is, is key to appreciating the value it brings, and why you should have an eNaira Account in the first place.
WHAT IS eNAIRA?
The eNaira is the digital version of the Naira. While Naira notes and coins are physically minted and produced by the Nigerian Security Printing and Minting Company Plc (NSPMC), the eNaira is digitally minted at the Central Bank of Nigeria on secured servers that make use of advanced cryptographic algorithms and technologies.
There are many reasons why the eNaira is a compelling proposition for individuals and businesses in developing economies. It is however clear that many people are still trying to come to terms with the difference between the Naira and the eNaira.
The aim of this piece is to outline the major differences between the Naira and the eNaira, and highlight what makes having an eNaira account a necessity. The easiest way to do this is to compare a typical bank account, with a digital wallet and an eNaira account.
BANK ACCOUNT, DIGITAL WALLET, AND eNAIRA ACCOUNT
Bank Account
A bank account is offered by a licensed financial institution for the main purpose of safe-guarding funds and providing access to it whenever needed.
Bank accounts are currently the most widely adopted financial solution for storing funds. Bank accounts are also used by individuals and organizations for a diverse range of financial transactions.
Funds in a bank account in Nigeria are protected by the Nigeria Deposit Insurance Corporation (NDIC) to a maximum amount of 500,000 Naira.
Digital Wallet
A digital wallet is a store of funds offered by licensed mobile money operators and banks. It allows customers to store, and manage, their funds digitally.
Digital wallets are primarily designed for individuals and SMEs, for funds transfers, bills payment, and merchant collections mainly through mobile phones. Digital wallets are beginning to witness massive adoption, especially by first-time account holders.
Funds in digital wallets are also protected to a maximum of 500,000 Naira by NDIC. Examples of digital wallets providers in Nigeria include Paga, OPay, Palmpay, etc.
eNaira Account
An eNaira account is a store of value that is made available to every Nigerian by the Central Bank of Nigeria. It allows customers to receive, store and make payments with eNaira.
The eNaira is designed to bolster financial inclusion, and as such is designed primarily for individuals and SMEs. It allows its holders to perform funds transfers, bills payments, merchant collections, and receive social disbursements faster, and more securely.
Funds in eNaira accounts are secured by the CBN up to the full value of the amount in the account at any time. eNaira accounts can be opened and operated digitally from CBN’s eNaira mobile application called the Speed Wallet or through licensed fintech apps like Remita.
Below is a summary comparison of bank accounts with digital wallets and eNaira accounts.
| Attribute | Bank Account | Digital Wallets | eNaira Account |
| Provider | Banks | Mobile Money Operators | Central Bank of Nigeria |
| Ease of Account Opening | Medium | High | High |
| Account Opening Process | Digital – mobile or web.Bank branchAgent Location | Digital – mobile or web. | Digital – mobile or web. |
| Minimum Account opening requirement | BVN | Phone Number and NIN | Phone Number andNIN |
| Target Users | IndividualsSMEsOrganizations | IndividualsSMEs | IndividualsSMEs |
| Primary Use-Cases | Funds transferBills paymentMerchant collections | Funds transferBills paymentMerchant collections | Funds transferBills paymentMerchant collectionsSocial Disbursements |
| Transaction Reliability | Medium | Medium | High |
| Operating Cost to customer | High | Average | Low |
| Funds Protection | Up to N500,000 by NDIC | Up to N500,000 by NDIC | Up to FULL VALUE by CBN/NDIC |
| Source | Physical cash-backed | Physical cash-backed | Digital currency-backed |
CONCLUSION
The eNaira account is the easiest account to open, the most cost-effective account to manage, guarantees 100% protection of all your funds and is proving to be the most reliable for transaction processing as it has the least possible transaction processing failure points.
eNaira is well-positioned to push Nigeria into the next phase of digital payments, financial inclusion and to unlock new opportunities in cross-border trade.
To experience first-hand the magic of the eNaira and enjoy all the benefits of transacting with Africa’s first Central Bank Digital Currency, download the Remita Mobile Application HERE.
-Mujib Ishola is Chief Technology Officer(CTO) at Remita