Following after China and Bahamas, the Central Bank of Nigeria has announced plans to roll out Africa’s first digital currency before the end of 2021.
The Director, Information Technology department of the CBN, Rakiya Mohammed, disclosed this on Thursday at the end of the virtual meeting of the Bankers Committee.
She said details of the planned roll out would be made public by the apex bank in the next couple of weeks.
“Nigeria hopes to propel the digital currency effort in Africa. China has gone far, by piloting the scheme. Bahamas has also gone live with their digital currency.
Before the end of the year, the CBN will be making special announcements to launch a pilot scheme of the digital money to provide this curreny to the people.
“We have a clear roadmap in the country. We have been exploring the various technology options available; engaging various industry players.
We are about to move to the next stage of approval of concept, to be followed by the pilot phase,” Mohammed said.
On its benefits, Mohammed said the
CBN digital currency was meant to be the third form of the tiered money in the country, apart from the two other forms already in existence, and would be accessible to everyone throughout the country.
Acknowledging that digital currency was not new in Nigeria, the Director said it would complement the card and notes already in the banking system.
“The CBN digital currency will be as good as one having cash in one’s pocket.
“The CBN is looking at different cases. For instance, on remittances, we all know how many hubs one has to cover before money is sent from abroad to Nigeria. The CBN digital money will reduce the cost of currency management,” she said.
Although the apex bank’s target was to achieve 80 percent financial inclusion for this year, the Director said so far only about 60 percent has been realised.
At the rate the industry is going, she said it was not likely the target would be met this year.
Mohammed said the CBN digital currency would accelerate the capacity to meet that target, regardless of where one is, just like cash, to transact business at a very reduced cost, in places like Ghana, South Africa and Unites States without having to transmit cash.
To complement the federal government’s effort toward achieving digital economy and cashless economy, she said the CBN resolved that cannot be achieved with cash.
“We have to go cashless. With the CBN digital currency, backed by the government, many people can make transactions online without fear or fault. It would enable innovation in the payment system in the country. Everyone will have access to CBN digital currencies,” the director said.
The CBN digital currency, she clarified, has nothing to do with cryptocurrencies, such as bit coins, as these are not under the control of the CBN.
These currencies, she pointed out, are purely private decisions to meet individuals needs, which the CBN has made very clear to the investing public.
On risks, she said the CBN spent over two years studying the concept of digital currencies, adding that some risks have been identified, which informed the decision to set up a central governance structure involving all industry stakeholders to look at some of these risks as the digital currency would be rolled out.
The decision whether the CBN digital currency would work together with other digital currencies in existence, she said, would be part of the decisions that the CBN would take in future.
“There are several considerations to make when one wants to go into digital currency, namely the architecture to consider, accessibility issue, privacy and asset organization and diversification.
“In a few weeks, the CBN should be able to make some definite announcements. In doing that, the CBN would involve the banks in execution,” she said.
FX supply to businesses, SMEs
On efforts to make foreign exchange readily available to businesses, the Managing Director of Fidelity Bank, Nneka Onyeali-Ikpe, said the issue was discussed extensively during the meeting, particularly on how the CBN intends to assist in that direction.
During the coming summer period, and the return of students to school in September, Onyeali-Ikpe said the observation was that the FX rates were going up.
Consequently, she said the CBN directed all commercial banks to ensure availability of FX at all times for those who want to buy business travel allowance (BTA) and personal travel allowance (PTA), medical fees, student school fees.
Also, she said banks were directed to ensure that all the eligible purchases during the period were met, to ensure Nigerians were not forced to go and patronise the parallel markets.
She said the banks were directed to communicate the information through all their platforms to their customers.
Besides, all PTA/BTA applicants were advised to visit the banks with the required documents, including international passport, visa, travel tickets and fill up Form A in the bank.
While no customer should be turned back, the MD said banks were advised to request for the replenishing of their stock of FX from the CBN, to ensure a hitch-free summer period and resumption of schools for children and less pressure on the FX and the rates would come down.
The supply of FX, she explained, was to meet the need for the CBN support small ans medium enterprises (SMEs) who need to import raw materials for their production, to enable them start up their businesses.
On whether the attention to banks for FX supply would affect the normal allocation to the Bureau de change, Onyeali-Ikpe said there was no discussion about stopping the BDCs.
Rather, she said they would continue to have their weekly allocations, while the banks would have additional allocations, to ensure all the points Nigerians go to purchase their FX to meet their legitimate needs were met.
“The two systems are to continue to run concurrently”, she said.
The Managing Director of Access Bank, Herbert Wigwe, who also spoke on the issue, said as part of CBN’s role to ensure price stability and the need to support SMEs, all banks were encouraged to go out and support SMEs who import raw materials for them to set up their businesses, to ensure there was adequate supply of FX at official rate to meet their requirements.
“As the economy is being powered ro grow post-COVID-19, the SMEs sector continues to be of critical relevance.
The growth rate in the gross domestic product (GDP) in recent times, the non-oil sector, in the agric, SMEs, and manufacturing space have contributed significantly.
“As part of efforts to diversify the economy, creating employment for the youth, and promoting SMEs to thrive, there must be availability of FX to SMEs to meet their needs. All banks are directed ro be available to ensure those needs are met, with the support of the CBN, to ensure even opportunities for wealth creation across all the regions in the country for long-term sustainability of our economy and reasonable price stability and for Nigerians leveraging investments in the payment systems and improvements in technology to translate into production and growth. That is why SMEs are specifically encouraged to approach their bankers to meet these needs, to grow our economy,” Wigwe said.
