THOUGHTS ON E-NAIRA AS IT LAUNCHES IN NIGERIA.

As a keen player in the FinTech ecosystem with 7 years of experience observing, selling, and building products and distribution network within the ecosystem, I can admit that there have not been a more exciting time for the industry than the past couple of years. Hundreds of millions of dollars in investments have been pulled in and unicorns are emerging fast.

Yet for the small players, there hasn’t been a more difficult time, low or blurred barriers to entry means that they are always competing with some new businesses and the big players are always circling around like sharks, straining their businesses with predatory pricing, poaching their best talents and generally shrinking their spaces by entering their niches easily.

It is against this backdrop that players would understand the magnitude of CBN’s initiative. The e-naira, regardless of assumptions, makes The Central Bank a pseudo-competitor.

The e-naira as a ‘govcoin’ creates a legal tender that only the government can issue and some of the functionality they can offer will definitely compete with what the Banks can do.

The e-naira is cash-backed and in that sense isn’t very different from Banks and doesn’t yield interest. Same thing with naira. So in this sense, it doesn’t differ so much with the money in my Transactional Accounts. It doesn’t appreciate or depreciate in value. It is not an asset. It is simply money, more like the one you have in your account.

If citizens starts storing e-naira in their wallets, are you not seeing that the government can actually leverage that, by-pass the banks and maybe with a bit of improvement be able to sell bonds and bills directly to the people.

The e-naira deliberately carried some of the commercial Bank’s albatross even as the CBN postures that it will deepen financial inclusion. Industry players understand that some of the factors hindering the unbanked from getting a bank account also hinders them from getting the Biometric Verification Number (BVN). We can talk about contiguity of Banking structures, Access Infrastructures, Electricity, Mobile Network Availability, mobile phone availability and Business considerations and how these have meant that NIBSS have collected about 50 million BVNs in Nigeria where population is said by several trusted sources to be pushing 200 million.

How does a tech-based solution that currently is only accessible by phone and requires a BVN and a Bank account drive or even deepen financial inclusion?

This is not to say that the e-naira doesn’t change the game. For one, it is another way that naira can be exchanged to the last detail. Imagine buying stuff at the mall and being told that your change is N63.50. When fully adopted, you can pay the precise amount down to the zeros removing the need to buy what one doesn’t need or forfeit your change. A more malleable naira is always a good thing and with other digital banking applications and instruments, the enaira adds it’s quota.

Sellers do not need to round up their goods to the nearest N100 anymore.

The P2P potentials of e-naira would ask questions of POS driven Agent Banking. Why would an agent need your POS if he can do P2P from his speed wallet to his Agent (merchant) and collect cash? This was supposed to be the mobile money proposition but didn’t get the adoption. Would the story change with the e-naira?

If it does, the POS might as well become obsolete.

The e-naira also would eschew fraud better than the banks at least from the perspective of the government. Built on the blockchain, all transactions are visible to the government. This gives a lot of power to the government and some initial commentary have wondered what the government would do with such power.

E-Naira packs a lot of power in facilitating social protection cash transfers and the broader G2P (Goverment to Persons) payments. By encouraging and providing structures for seamless straight-through processing of transactions, in prospect, this gives the government a firmer grip as they operationalize G2P use cases.

Why would the government need Payments Service Providers when they can directly pay their customers and their customers can cash out from literally anyone that has an e-naira wallet via P2P?

These are personal opinions and also very early days but it will be fantastic to watch how things develop.

Pius Tochukwu Okwuanya is a Digital Payments Consultant and studies Digital Business at University of Westminster, London, United Kingdom.