The Impact of eNaira Digital Currency on SMEs Business Transactions in Nigeria

On the 5th day of February 2021, the Central Bank of Nigeria (“CBN”) instructed banks and other financial institutions to refrain from dealing with cryptocurrency (a digital currency) and facilitating payment for cryptocurrency exchanges. With this, various crypto-based companies were frustrated out of the Nigerian market and the growth of other digital and virtual currencies in Nigeria decelerated.

Interestingly, the CBN has recently launched a project titled “Project Giant” on June 24, 2021; a project to produce and issue a government-controlled digital currency in Nigeria known as “eNaira”. On August 27, 2021, the CBN circulated a presentation to licensed Financial Institutions (“FI”) which provides guidelines on the issuance and operation of eNaira in Nigeria (“Presentation”). In this article, we have highlighted the pertinent features of eNaira and its prospective operations in Nigeria.

  1. What is eNaira?

eNaira is a digital currency to be issued by the Nigerian government with the same value as fiat naira (i.e. physical naira notes). It is to be purchased by the general public through FI and transferred into e-wallets maintained by customers. It is similar to the Chinese digital renminbi and the Swedish e-krona.

  1. How is eNaira different from cryptocurrency?

Cryptocurrency is a decentralised form of encrypted digital currency based on blockchain technology whilst eNaira is a government-controlled digital currency envisaged to be more stable than cryptocurrency as its value is to be at parity with the country’s official currency.

  1. What is the benefit of eNaira over regular digital banking?

Unlike digital banking which involves customers transacting with money maintained by them in a bank, eNaira is actual money earned and maintained by customers in their e-wallets. Consequently, customers will be able to transact with it like fiat currency without the involvement of intermediaries as is the case with digital banking. The elimination of the intermediaries is expected to reduce the cost and time of transactions. Furthermore, cross-border transactions are expected to become easier. It also provides an opportunity for unbanked Nigerians to transact with eNaira without a private bank account.

  1. How will eNaira operate in practice?

eNaira will be supplied by the CBN (from their Stock Wallet) to intermediaries (licensed FIs) for onward supply to individuals. Consequently, FIs will maintain a treasury wallet to receive eNaira from the CBN. eNaira transactions will operate on new and existing systems including the Nigerian central switch i.e. the Nigeria Inter-Bank Settlement System Plc (NIBSS).

There are to be four major parties in the operating model of eNaira. (i) The CBN; (ii) the licensed FIs (responsible for issuing eNaira to Customers, monitoring digital transactions under their institution; (iii) Businesses and Merchants (responsible for complying with the CBN regulation on KYC and AML/CFT); and (iv) Customers (responsible for maintaining an eNaira Wallet).

  1. How will the eNaira Wallet operate?

Upon launch of the eNaira, the CBN will provide an interim e-wallet (the Spead Wallet) for customers until FIs can develop and launch their individual wallets. There will be three tiers of wallet as highlighted below.

Types of wallet Cumulative balance Limit Transfer Limit KYC Requirement
Tier 1 300,000 50,000 No existing bank account, phone number validated by NIN
Tier 2 500,000 200,000 Existing Bank account and Bank Verification Number (BVN)
Tier 3 5,000,000 1,000,000 Existing Bank account and BVN
Merchant No limit 1,000,000 Full KYC requirement and Anti-money laundering and counterfeit terrorism regulation of the CBN



For eNaira project to be successful, a good number of Nigerians (including companies and government agencies) will have to maintain e-wallets. Nevertheless, eNaira will be troubled by some of the current issues of the country including illiteracy, lack of power, lack of internet coverage, and the volatility of the Nigerian currency.

Though the provisions of the Presentation are tentative as the CBN is yet to issue a draft guideline or framework on the operation of eNaira, this project appears to be a step in the right direction to achieving a cashless economy.

There are also hopes (though there is no indication of the strength of this) that the guidelines of the CBN will create an avenue for the operation of cryptocurrency and virtual currencies in Nigeria.

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