A CRITICAL EXAMINATION OF THE BENEFIT OF E-NAIRA PLATFORM TO NIGERIA CITIZENS

CHAPTER ONE

INTRODUCTION

1.1 Background Of The Study

According to the Financial Action Task Force (FATF 2014), digital currency is a digital representation of value that is digitally transmitted while functioning as a medium of exchange, unit of account, and store of value, and it works exclusively by agreement among virtual currency users. Similarly, The European Banking Authority (2015) defined virtual currency as "a digital representation of value that is not issued by a central bank or a public authority, is not necessarily attached to a fiat currency, but is accepted as a means of payment by natural or legal persons and can be transferred, stored, or traded electronically."

Eventually, the general market and the majority of financial markets evolved tremendously. In this regard, systems of trading products have evolved and adapted to market demands, with the goal of making business transactions as simple  as possible (Grinberg, and Ruben 2012). 

In light of this, there has been a rapid emergence and growth of several digital currencies. This trend in the financial sector sparked several countries' interest in developing a digital currency which is to be a replica of their respective local currencies(Abdulkareem,2021).  As a result, the Nigerian government developed a digital currency for its currency, branded as "e-Naira”.

E-Naira is a digital currency that the Nigerian government created to serve as a replica of the fiat Naira (i.e. physical Naira notes). It will be purchased by the general public through FI and transferred into e-wallets. It is comparable to the digital renminbi in China and the e-krona in Sweden (SearchNGR). 

Furthermore, e-Naira will serve as a wallet for customers to store current funds in their bank accounts. It will also promote financial inclusion by enabling cheaper and faster remittance inflows (SearchNGR).

However, the prospect of eNaira's effective operation and its profitability to subscribers has been of public interest in Nigeria. To meet the needs of the masses and satisfy their curiosity, the CBN ensured that the e-Naira platform provides excellent services to users both in and outside of Nigeria (Abdulkareem, 2021). In other words, the platform  was set to aid speedy transactions, hence increasing local and international trade by enabling cheaper transactions across countries of the world (Abdulkareem, 2021). This simply implies individuals in Nigeria are offered limitless access to the international market as the platform promotes international trade and financial exchange. From the ongoing, this study therefore aims at examining the benefits of the e-Naira platform for Nigeria's citizens.

1.2 Statement Of The Problem

The Nigerian Naira was introduced to replace the Nigerian pound in 1973 (Central Bank of Nigeria, 2000). The coins of the new currency were the first coins issued by an independent Nigeria before the introduction of Naira notes in 1973. However, the use of Naira notes in Nigeria has not been favourable to individuals and businesses in the country. This is as a result of the high rate of printing and use of counterfeit Naira notes in society, as well as the rate of armed robbery. This phenomenon has raised public concern, as individuals and businesses suffer immensely as a result of this menace. According to Adebayo (2000), adopting a cashless policy and exploring global technological advancement by developing a non-physical but acceptable legal tender will serve as a strategy for curtailing the increasing use of counterfeit notes and physical money theft.

From the aforementioned, and the expanding use of digital money, various governments across the world (Nigeria inclusive) have shown an interest in developing a digital currency with the CBDC emerging as a starting point for Nigeria, considering its economic and non-economic benefits. In other words, CBN has provided to the Nigerian society the e-Naira platform, hence adopting the digital currency dispensation (Emeka, 2021). The development of this system will minimize the use of Naira notes and physical carrying of cash.

Additionally, e-Naira was built to allow rapid transactions, cheap diaspora remittance, direct government help, easier local payments, and secured banking. According to CBN, "eNaira was created with residents' needs in mind, as they recognise that citizens are individuals whose demands are always growing. Hence, there is a need for the method of supplying customised solutions to constantly evolve ((Emeka, 2021). From functionality, call to action, to user interface, the goal has always been to create an amazing digital experience customized to citizens’ needs.

Further, the platform assures that government financial aid reaches the right individuals from the comfort of their locations. More-so, eNaira makes it feasible to send funds, save money, and save time while at it. This study, therefore, is set to meticulously analyze the effectiveness of the acclaimed service provided by the eNaira platform.

1.3 Objective Of The Study

The primary aim of this study is to critically examine the benefit of the eNaira platform to Nigerian citizens. Specifically, the study is set to;

1.        Unveil the various ways in which eNaira will significantly be useful to Nigerian citizens.

2.        Determine if standards of eNaira services will promote the financial activities of citizens better compared to banking services.

3.        Ascertain if Nigerian citizens can perform local and foreign investments through the eNaira platform.

1.4 Research Question

The study will be guided by the following questions:

1.        What are the various ways in which eNaira will significantly be useful to Nigerian citizens?

2.        Will the standards of eNaira services promote the financial activities of citizens better compared to banking services?

3.        Can Nigerians perform local and foreign investments through the eNaira platform?

1.5 Significance of The Study

The study will be most relevant to the Nigerian populace who are yet to secure an account on the eNaira platform. The study will, through the results of its findings, enlighten Nigerians on the possible opportunities that exist on the eNaira platform and the need to explore the services offered by the system. However, since the study is channeled towards obtaining and analyzing public perception on the eNaira digital currency, the study will therefore in respect to the opinions of citizens, apprise the Nigeria government and the CBN on perception of the populace about the newly developed platform.

Additionally, the study will serve as a source of information to researchers, students and other academic inclined individuals who may be carrying out research on a related topic.

1.6 Scope Of The Study

Generally, the study is set to critically investigate the benefit of e-Naira to Nigeria citizens. In furtherance, the study will unveil the various ways in which eNaira will significantly be useful to Nigerian citizens, determine if the standards of eNaira services will promote the financial activities of citizens better compared to banking services, and ascertain if Nigerian citizens can perform local and foreign investments through the eNaira platform. The respondents for this study will be obtained from selected Nigerians in Benin, Edo State, Nigeria.

1.7. Limitations Of The Study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents.

In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. 

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

1.8 Definition Of Terms

Naira: This is the basic monetary unit of Nigeria.

Digital Currency: Digital currencies are monies that exist not in physical form but only as electronic data, but perform the basic functions of money being unit of account, store of value and means of exchange.

eNaira: eNaira is the name given to the CBN's first proposed digital currency.

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