Introduction
With the current financial quagmire faced by Nigerians, you will agree with me that Nigeria’s payment system has long been plagued by inefficiencies and a lack of transparency.
The traditional cash-based system has caused various problems which include making it difficult for the government to effectively monitor and regulate financial transactions and properly manage the current change currency swap policy, these eventually lead to several issues such as corruption in public service payments, lack of financial transparency, cash-trapped citizens, agitations and violence, tax evasion, and revenue leakage.
But, if you recall, in October 2021, the Central Bank of Nigeria launched the e-naira, a digital currency that has the potential to transform the country’s payment system. The currency issues plaguing Nigerians had been solved by the CBN but with loads of technical and business implementation problems.
Although with a lot of development and implementational lapses, with the details provided in the whitepaper, the e-naira aims to promote a cashless policy, curb public service corruption, and ensure financial transparency and financial inclusion. However, there are some challenges facing the e-naira, including concerns about user privacy and cybersecurity, adoption, and proper usage, interoperability with other payment systems, and the grave question of connectivity and accessibility.
In this article, we will discuss how e-naira can support a cashless policy, curb public service corruption, and boost taxation and revenue generation.
Supporting the Cashless Policy
The e-naira as we know it is a digital currency that enables electronic transactions, reducing the need for physical cash. One of the main advantages of e-naira is that it can support the government’s cashless policy. The abandoned e-naira has solved the problem of financial inclusion and cashlessness that is causing so much rancor in the country. For example, the e-naira is directly connected to the phone numbers, and BVN of citizens, so it’s quite easy for individuals to conduct a business transaction with the e-naira. And moreover, the currency is blockchain-based, so, there is ease in translations, cost-efficiency, and transparency.
Curtailing Public Service Corruption
Public service corruption has been a longstanding challenge in Nigeria. Recall a conversation I had with a civil servant in one of the states in the middle belt, where he said the day he knew his actual salary he was surprised, this happened when one of the newly appointed Permanent Secretary implemented a direct payment system, and during that period he noticed that the amount deposited into his account was 5X higher than the amount he was been paid in cash.
This is the fairy tale of most civil servants, particularly in the military. In truth, the traditional cash-based payment system has provided an avenue for corrupt officials to divert funds meant for civil servants. However, the e-naira can easily curb public service corruption by increasing transparency and accountability in payment systems.
By creating an electronic record of every transaction, it becomes easier to track and trace payments, reducing the risk of fraud and corruption. In addition, the e-naira can eliminate the need for intermediaries or middlemen in payment processing, reducing the risk of corrupt officials diverting funds meant for civil servants.
Boosting Taxation and Revenue Generation
The e-naira can also help boost taxation and revenue generation in Nigeria. By creating a more efficient and transparent payment system, e-naira can help improve tax collection and reduce tax evasion. With digital records of transactions, it becomes easier to track payments and identify taxpayers who may be avoiding their tax obligations.
In addition, the e-naira can help increase revenue collection by reducing the opportunity for corruption and ensuring that all funds are properly accounted for. By automating payments and reducing the need for manual processing, the e-naira can help reduce the risk of fraud and mismanagement of funds, which can ultimately lead to increased revenue for the government.
Financial Inclusion
The e-naira can also improve financial inclusion in Nigeria by providing a digital currency that is accessible to all, including those who are currently unbanked. According to a report by the World Bank, over 40% of adults in Nigeria do not have a bank account.
The e-naira can help to address this challenge by providing a digital wallet that can be accessed using a mobile phone, making it easier for people to participate in the formal financial sector, so inevitably my uncle in Taraba can conduct transactions with ease, so, my grandfather in Igbeti doesn’t need to bother going to the bank, and my aunties in Imo and Bayelsa, can conduct transactions from the comfort of their homes .
Challenges facing the e-Naira
While the e-naira has the potential to transform Nigeria’s payment system, some challenges need to be addressed to ensure its success. Some of the key challenges that need to be addressed are:
Cybersecurity, as the e-naira system is vulnerable to hacking and other types of cyber attacks. The Central Bank of Nigeria needs to ensure that appropriate measures are taken to protect user privacy and prevent the misuse of digital currencies.
Connectivity and accessibility: For the e-naira to be widely adopted, it needs to be accessible to people in all parts of Nigeria, including remote and underserved areas. This may be challenging given the country’s infrastructure and internet connectivity issues.
Lack of education and awareness: Many people in Nigeria may not be familiar with the concept of digital payments, which could be a challenge in adopting e-naira. Therefore, the CBN can partner with other remote stakeholders like SIBAN to properly drive educating people on how to use the e-naira, including the benefits and potential risks associated with it.
Conclusion
The abandoned e-naira had the potential to transform Nigeria’s payment system by promoting a cashless policy, curbing public service corruption, and boosting taxation and revenue generation. As a digital currency, e-naira can improve financial inclusion and increase the efficiency of financial transactions in the country.
In conclusion, the e-naira is a promising development in Nigeria’s quest to improve its payment system, promote financial inclusion, and enhance revenue generation. With the right policies and measures in place, the e-naira can help address many of the challenges facing the Nigerian economy, and serve as a model for other African countries seeking to transform their payment systems. And I may advise the Federal Government not to abandon the project.
