Why the eNaira digital currency is failing

Nigeria’s President Muhammadu Buhari this week unveiled the eNaira, a Nigerian central bank issued digital currency that has been touted to woo the country’s tech savvy young population.

The president boasted that the digital currency would add $29 billion to the country’s economy in 10 years. But barely three days since it went live, everything that could possibly go wrong, has went wrong for the eNaira project. 


First, the CBN which everyone thought were the sole owners and controllers of the project said it will not bear any liability for any interruption, loss of revenue or loss of services arising from the use of the eNaira website. It doesn’t make for a good first impression when a service provider tells you you’re on your own should anything go wrong.  


The limitation of liability on the CBN’s website read, “In no event will the CBN or its directors, officers, employees, independent contractors, affiliates or agents, or any of its or their respective service providers, be liable to you or any third party for any use, interruption, delay or inability to use the eNaira website, lost revenues or profits, delays, interruption or loss of services, business or goodwill, loss or corruption of data, loss resulting from system or system service failure, malfunction or shutdown, failure to accurately transfer, read or transmit information, failure to update or provide correct information, system incompatibility or provision of incorrect compatibility information or breaches in system security, or for any consequential, incidental, indirect, exemplary, special or punitive damages, whether arising out of or in connection with the use of the eNaira website.”


Then on Wednesday, barely about 48 hours after the launch, and with about 100k downloads: most of them leaving angry and negative reviews, the eNaira wallet was removed from the Google Play Store.


A CBN spokesman explained what happened to reporters by saying “There is an upgrade going at the moment by Google; try in the next few hours.”


What exactly is the eNaira?


The eNaira is the digital version of the Naira, it is a central bank issued digital currency (CBDC). If this doesn’t make sense to you, that’s because the whole thing doesn’t make much sense and no one really understands what the eNaira is or what it is supposed to achieve. 


See, the Naira is already a digital currency. Consider this, the money in your bank account, you can make payments with it through digital transfer without needing to pay for stuffs with physical cash. The use of POS payments, payments through the multiple digital wallets we already have, all of these have already made the Naira a digital currency!


One key difference the CBN is marketing about the eNaira is that the currency is not backed by physical cash, meaning if you have your money in eNaira you cannot withdraw cash from an ATM and if you’re transacting with a merchant that doesn’t take the eNaira or only takes cash, well..

This seems more like a disadvantage, because while the regular Naira can perform all the transactions of the eNaira, the eNaira doesn’t give you access to physical cash which is still very much in use in today’s Nigeria. 


The CBN also says the eNaira is supposed have its own Blockchain: the technology that powers most crypto currencies. 


Here is how the Blockchain works, when a transaction is carried out on a network like Bitcoin, several computers compete by solving complex mathematical equations. The winner wins the right to record the transaction in the hyperledger called the Blockchain and they get some predefined reward. 


In the case of the eNaira, the CBN has said it will be the exclusive keeper of all records, meaning there are no computers competing against each other like they do to record most crypto currency transactions. 


This means while users of cryptocurrencies are mostly anonymous, the CBN will know who exactly is buying the eNaira and how much they are buying: they’ll ask for your BVN, phone number, address and other details at the point of registration. 


The eNaira is a failing project for a multitude of reasons, people dont know exactly what it is or what it is supposed to do exactly and the CBN has been very limited with the explanation it has given the public since the project began. 


While the eNaira can pass as a digital currency, it is definitely not a cryptocurrency.

Cryptocurrencies became very popular in Nigeria before the government banned it, a lot of would be users who erroneously thought of the eNaira as a digital currency will realize that it is not, and that would further compound the problems the currency is already facing.  


Then there is the political reason, overwhelming majority of Nigerians hate their politicians.

A politician like Muhammadu Buhari earned his faith when his government announced a ban on cryptocurrency transactions in the country earlier this year. Most of the negative reviews that forced Google to remove the eNaira app from its Playstore is in some ways a payback for the government’s earlier actions. 

To understand what the eNaira is, it is important to understand what it isn’t. It is not a crypto currency. It does not have any special features that the Naira does not already have. It is just another digital wallet that everyone already have one of those on their phones anyways.

FAQs

What makes eNaira different from the money in your account?

The major difference between the eNaira and the money in your account is that eNaira is wholly digital, it can not be converted to cash and withdrawn at the ATM like the money in your account. While eNaira is strictly for digital payments, the money in your account can be withdrawn as physical cash.

How do I put money in my eNaira account?

Upon creating your account on the speed wallet app, you will be asked to bind your bank with your account number and BVN. Thereafter, you can always transfer money from your bank to your eNaira wallet using your bank smartphone app.

Go to “Transfers” on your bank app.
Select “Transfer to eNaira wallet”.
Login with your Speed-wallet details to complete the transaction.

Is eNaira safe?

Yes, eNaira is safe and secure. All funds are insured by the NDIC, and the app itself is owned and maintained by the CBN.

Is eNaira a stable coin?

eNaira is not a digital currency, it is simply a payment platform owned by the CBN. The value of the eNaira is directly proportional to the Naira which makes it a stable coin of a sort.

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