The Central Bank of Nigeria (CBN) has announced the launch of the eNaira, its digital currency, as a payment option for recipients of remittances from the diaspora.
The move, according to the apex bank, was made to advance efforts to liberalise the distribution of diaspora remittances.
The bank’s circular titled “Operational Framework for eNaira Payment Option to Recipients of Diaspora Remittances,” dated June 15, 2023, contained the new policy.
The circular, which was acquired, was sent to the general public and International Money Transfer Operators (IMTOs).
The CBN claimed that the instructions in the circular, which was signed by Dr. Ozoemena Nnaji, director of the CBN’s Trade and Exchange Department, would make it easier to pay recipients of diaspora remittance proceeds in eNaira.
According to the regulations, the IMTOs must request a one-time “No-Objection” from the Central Bank of Nigeria (CBN) in order to pay out in eNaira.
Additionally, the bank must disclose the account information where foreign currency from IMTOs will be received.
The CBN emphasised that receiving remittance proceeds in eNaira remained an option, and that the option to pay out in digital currency would occur simultaneously with the option to pay out in dollars.
The framework stipulates that IMTOs must pre-fund the CBN account with foreign currency and open merchant wallets through the CBN.
As a result, the central bank will prefund the IMTO merchant wallet with the eNaira equivalent of the foreign currency.
The CBN went on to say that the payment process entails a sender starting a diaspora transfer with an IMTO of their choosing abroad while providing information about the beneficiary’s wallet.
When the beneficiary is credited with the eNaira equivalent of the foreign currency sent at the origin at the I&E window rate, the IMTO debits its eNaira merchant wallet.
The alternative, according to the apex bank, is for IMTO to integrate with the eNaira portal from its platform using an API made available by CBN, starting a transfer of the eNaira equivalent of the foreign currency sent at the origin at the I&E window rate.
Former President Muhammadu Buhari unveiled the central bank’s eNaira initiative on October 25, 2021, with the goal of advancing a more cashless, inclusive, and digital economy while enhancing the benefits of earlier monetary policy measures and quickly expanding payments platforms.
In addition to fostering rapid financial inclusion, lowering the cost of processing cash, enabling direct and transparent welfare intervention for citizens, and boosting revenue and tax collection, digital innovation is anticipated to support a resilient payment system ecosystem.
In essence, the eNaira would help with diaspora remittances as well, cutting the cost of financial transactions and increasing payment efficiency.
The eNaira continues to be the nation’s digital equivalent of the actual Naira, according to the apex bank.
“The eNaira is a liability of the CBN and, like the physical Naira, is legal tender in Nigeria. The value of the eNaira and Naira will be equal, and their exchange rate will always be 1 naira for every 1 eNaira.
