A novice’s guide to understanding eNaira


Chukwuemeka Fred Agbata Jnr.

Finally, it’s live! The long-awaited and much-anticipated eNaira has officially been launched. While I have written a number of articles on the eNaira, one thing I have noticed is that a lot of people are still finding it hard to grasp the idea behind the Central Bank Digital Currency.

It is perfectly understandable that there are still citizens who are yet unclear about the nature of the eNaira and, more importantly, how to use the digital currency. In most cases, some need to be convinced as to why they should join the race to download the eNaira app and what this will mean for their business. There are valid concerns, if I may say so.

Hence, in this piece, I attempt to demystify the eNaira, explain what it is and what it is not while giving a brief analysis of how to make or accept transactions using the eNaira.

Dissecting the eNaira

The eNaira is a digital version of the paper naira issued by the Central Bank of Nigeria. Playing a purely complementary role to the naira, the digital currency will have equal value as physical cash that we use in our day-to-day activities.

Contrary to what many think, the eNaira is not a cryptocurrency like Bitcoin, Ethereum, Dogecoin or any other kind of crypto. It is not decentralised and cannot be privately controlled the way cryptocurrencies are.

However, like these currencies, the eNaira is built on a blockchain open ledger technology; this is to ensure that a holder of the CBDC cannot have a duplicate or fake eNaira because each eNaira note will be unique.

Another concern that comes to mind is the stability of the eNaira. Before venturing into the unknown, especially in financial matters, security and stability are matters of key interest for any party in a given business transaction. When it comes to the eNaira, people want to know if it is a stable coin.

Keep in mind that a stablecoin is a cryptocurrency backed by reserves that are currencies or other assets, such as gold, that can be readily transferable and are used to balance transactions and payments anywhere in the world – case in point, the US dollar.

Stablecoins refer to cryptocurrencies that seek to attach their market value to some external reference. An example of a stablecoin is the USDT, which is tied to a currency, the US dollar, and maintains a stable exchange value.

The eNaira technically is linked to the FIAT naira; and as we know from personal experience, the naira is not exactly stable. So, for the eNaira to be stable, it then has to be linked to a universally stable currency like the US dollar or euro.

The eNaira is designed for all whether you are an individual, consumers, merchants, government ministries, departments and agencies, licensed financial institutions, and even the central bank itself.

Using the eNaira for transactions

Imagine you want to send N100 to your aged mother in one remote village where there are no bank branches. A common process is to buy a recharge card of the same value, text to her mobile phone, after which she goes to any phone card retailer and exchanges her N100 credit for N95 in cash.

Rather than go through all that, you only need to debit your bank account for N100, convert it to eNaira, and transfer it to your mother. Having received the money, she can spend it directly from her phone or exchange it for cash. To enjoy this service, you need to have an eNaira wallet into which you store and use your digital currency.

In the case of a person-to-person transaction, holders of the eNaira wallet can easily transfer eNaira to another holder. In a simple process, it is possible to credit your eNaira wallet from your account within the same bank or a different bank account. While you cannot cash out from eNaira to physical cash, you can do so from your eNaira wallet to your cash within the same bank or another account in a different bank.

The same straightforward process applies also when making person-to-merchant payments, government-to-citizen, or citizen-to-government payments. With the e-Naira, you can make or receive salary payments, and payments for goods and services can be concluded.

Taking full advantage of eNaira

The eNaira has a cutesy tagline, ‘Same Naira, More Possibilities’. No doubt this is to inspire trust while encouraging the mass adoption of digital currency. Anyway, it has a low-cost advantage in comparison to FIAT.

For one, traders will pay no fees for withdrawals and deposits to and from their bank account; that in itself is a massive incentive. In line with Nigeria’s financial inclusion agenda, the e-Naira will also onboard millions of the unbanked – Nigerians who have mobile phones but without bank accounts. Though formerly unable to enjoy financial services in their entirety, these ones will be brought into the formal financial economy.

Artisans including plumbers, tailors, carpenters and fashion designers can accept payments on their phones, store them in their wallets, and make transactions with any vendor or customer.

Also, the eNaira will be upgraded, and when this is done, it will allow for cross-border transactions. This means that eNaira can be used by any two-party actors who can credit a Nigerian banking institution with corresponding currency. To illustrate, a trader banking with UBA in Kenya can settle his import bills from the Democratic Republic of Congo using e-Naira.

Interestingly, because many citizens lack trust in financial institutions, eNaira will make it possible for customers to monitor their wallets, balances, and transaction history in real time.

On the one hand, by integrating into the CBN’s forex process, the digital currency will make it easier for remittances to flow into Nigeria. On the other, Nigerians in the diaspora can send funds to friends or relatives through international money transfer organisations who will buy eNaira from their corresponding Nigerian banks.

The problem of accessibility

Having gained more understanding about eNaira, compared to when you started reading this piece, perhaps you wish to experiment with this idea. The question on your mind might be how to get the eNaira. To access the eNaira, you need to download the ‘speed wallet’, which allows you to conduct transactions with speed and ease.

Before you make that decision, however, reports have it that the eNaira speed wallet pulled a disappearing act from the Google Play Store barely 48 hours after its launch. Conversely, the eNaira merchant wallet is still up and running with over 10,000 downloads.

While some users have complained about poor user experience, others are pretty distrustful of the terms, conditions, and disclaimer notice given by the CBN.

I believe these are fixable issues, and since we live in a digital world that is increasingly becoming cashless, the eNaira project, to all intent and purposes, is a boon to the Nigerian economy.

In my next piece on the ICT Clinic column, I will explore the possibility of the eNaira becoming a world-class digital currency and the importance of local collaboration in driving Nigeria’s vibrant financial sector forward.

CFA is co-founder of &, platforms deepening Africa’s tech ecosystem &, a social enterprise supporting innovation in Africa. (Punch)

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