The Central Bank of Nigeria has recommended using eNaira for cash transfers during the National Social Safety Net Plan Scale Up in an effort to promote a cashless economy.
This was stated in the National FinTech Strategy paper that was downloaded from the CBN website.
The National Financial Inclusion Steering Group, which is led by CBN Governor Godwin Emefiele, developed the plan blueprint.
The document disclosed that payments to the weak and destitute on the social registry might be pre-programmed for the eNaira.
It read, “The central bank can use a pre-programmed eNaira to pay intended beneficiaries on the social register, which could be accepted only for a specific purpose and at specifically authorised locations.
“This use case will ensure the proper use of social funds, ensure high-quality data can be collected on the performance of these programs, and help to prevent leakage or diversion of funds. This capability could be extended to other use cases in financial services and related ecosystems, where there exists a priority to maintain the integrity of funds and the purpose for which it is used.”
The CBN launched its Central Bank Digital Currency, eNaira, on October 25, 2021, to drive financial inclusion, payments systems efficiency improvements covering remittances and social intervention, and revenue and tax collections.
The document noted, “In Nigeria, the eNaira objectives include monetary policy effectiveness, financial inclusion, payments and remittances efficiency (domestic and cross-border) and government payments.”
After receiving approval from the National Assembly, the National Social Safety Net Programme Scale Up, which would cost $800 million, is anticipated to begin in 2023.
On the World Bank website, it is verified that the NASSP-SU was accepted by the organization on December 16, 2021, and that it will be in effect until June 30, 2024.
The Federal Ministry of Humanitarian Affairs, Disaster Management, and Social Development will carry out the $800 million initiative.
The National Social Safety Net Coordination Office’s database has information on 49.81 million people, including 12.06 million poor and vulnerable households.
In January last year, the National Coordinator, National Social Safety Nets Coordinating Office, Mr Apera Iorwa said that the Federal Government disbursed about $300m to the poor and vulnerable in its National Social Register through N5,000 cash transfers in four years.
He also disclosed that two million households had benefitted on an average of five individuals per household, which is about 10 million individuals.
In order to boost Nigeria’s social safety nets and social protection system and to help end extreme poverty and advance shared prosperity, the Federal Government and the World Bank launched the NASSCO in 2016.
The social safety net initiative, which ran from June 2022 to June 2023, received a $500 million loan from the World Bank.
Iorwa said that an additional $800 million had been agreed by the World Bank to continue the assistance program until 2024, which would help 8.5 million more Nigerians.
The CBN has approached a New York tech company to redesign the underlying technology, according to a recent Bloomberg story, in an effort to build an effective digital currency and secure widespread acceptance.
According to the February 21 Bloomberg report, the CBN is in talks with new “technology partners” to develop a new and enhanced system to manage the eNaira.
It was reported that the apex bank has discussed these plans with the New York-based technology firm, R3.
The report claimed that the new software for the eNaria will be created to allow the CBN to have complete control over the initiative.
It was also noted that the effort to create the eNaira began in 2021, with the help of the financial software company, Bitt.
The report stated that the new partner won’t immediately take Bitt’s role but will help phase in total control for the central bank.
Reacting to this, Bitt said it was aware that the CBN works with various partners for its technological innovations.
It affirmed that it still works closely with the CBN and is “currently developing additional features and enhancements.”
Although it is one of the first countries to have launched a Central Bank Digital Currency, Nigeria’s eNaira got off to a sluggish start, with low adoption.
The PUNCH recently reported that since its launch in 2021, the usage of the eNaira — Nigeria’s digital currency — has failed to pick up, according to the International Monetary Fund.
According to the fund, only about eight per cent of eNaira wallets are in use, with an average transaction value of N53,000.
