The World is becoming more technological by the day and the development of technology in recent times have adopted a more versatile approach so much that it cuts across every aspect of human existence and dealings. Under this circumscription is the financial sector of the economy. While technological advancement is being recorded in other variants of human life, the financial sector must also be up to speed technological to prevent a dysfunction in the system. In this regard, the recent development in FinTech and technology at large has caused the Government of Nigeria, acting through the Central Bank of Nigeria (“CBN”) being the apex monetary authority in Nigeria, under the empowerment of the Central Bank of Nigeria Act of 2007 and the Banks and Other Financial Institutions Act of 2020 (BOFIA) to issue legal tender currency, ensure financial system and promote the development of electronic payments system; to rationalize and propose to introduce the eNaira system.

Particular attention is paid to the framework of the eNaira as set out in the official Regulatory guidelines on eNaira issued by the CBN on October 1, 2021.

The eNaira system is essentially the digitalization of the Naira denominations already in circulation in Nigeria. The intention is for the paper denomination and the digital denomination to rank pari passu i.e., at ratio “1:1”. Thus, every N5 in paper money would equal 5 eNaira and so on. The traditional paper Naira valuation at the Foreign Exchange Market, Money Market, Stock Exchange Market, Capital Market and so on, would also be the value of the eNaira. The CBN in its optimism, believes the eNaira to complement the traditional Naira “as a less costly, more efficient, generally acceptable, safe and trusted means of payment”. It is also speculated to improve monetary policy effectiveness, enhance government’s capacity to deploy targeted social interventions and boost remittances through formal channels.

In Operating the eNaira, an eNaira wallet is required. The eNaira wallet is used metaphorically with a physical wallet, to perform similar functions i.e., to access, use and hold the eNaira. The eNaira is also exchangeable for other Central Bank Digital Currencies (CBDCs). Hence, a holder desirable for a CBDC other than the eNaira can seamlessly exchange his eNaira for that CBDC. The eNaira shall apply to all financial institutions (FIs) i.e., companies engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investment and currency exchanges, e.g., Banks, trust companies, insurance companies, brokerage firms, investment dealers and so on.

The eNaira would be minted and issued by the CBN through the Digital Currency Management System (DCMS). The CBN would also administer the eNaira through the instrumentality of the DCMS. There is a mandate on FIs to maintain a treasury eNaira wallet for holding and managing eNaira on the DCMS. FIs would manage their digital currency holdings, requests and redemption with the CBN through the Financial Institution Suite. The FI Suite would take the form of an application to be used exclusively by FIs. Having minted the eNaira, the CBN shall store them in an a non-physical “warehouse” called the ‘eNaira Stock Wallet’. This stock wallet shall belong exclusively to the CBN. a FI shall maintain one treasury eNaira wallet to warehouse eNaira received from the CBN eNaira stock wallet. FIs may however create sub-treasury wallets for branches tied to it and fund from its single eNaira treasury wallet with the CBN.

The eNaira platform would provide eNaira Consumer wallets for end users to transact eNaira. Every transaction by holders will be consummated from the eNaira consumer wallet. A FI may create eNaira branch sub-wallets for its branches. The eNaira branch sub-wallet shall be funded from the treasury eNaira wallet. To make and receive payments for goods and services through eNaira, the eNaira Merchant Wallets would be used. eNaira wallet would be secured by a two-factor authentication primarily and subsequently, other measures would be employed. Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) checks would apply to the eNaira for fraud detection and prevention. For efficient transfer of eNaira, FIs shall integrate their backend systems to the DCMS.

On the occasion of any complaint, the Helpdesk of the user’s preferred FI Helpdesk is to be contacted. Where the complaint is solved, resort would be made to the eNaira Helpdesk. Complaints in this sense also involves disputes arising between FIs which would be directly reported to the eNaira Helpdesk Team and resolved within two (2) working days. Where a party or both parties are unsatisfied with the resolution of the eNaira Helpdesk Team the dispute shall be referred to an arbitration panel under the extant Arbitration and Conciliation Act.

Categorisation of Users

The eNaira Guidelines created different categories for users, each with its distinct requirements. Unique identifiers are provided for three categories of users: (i) corporate entities are to be identified by their Tax Identification Number (TIN); (ii) individuals are to be identified by their National Identity Number (NIN) and/or Bank Verification Number (BVN); and (iii) Merchants, who are not corporate entities, are to be identified by their BVN. eNaira Guidelines in addition, different documentation requirements apply to each category of user. Users are categorised here into Tier 0, Tier 1, Tier 2, Tier 3, and Merchants, each with its daily transaction and eNaira wallets limits. Merchant is the only category of user without any daily transaction or eNaira wallets limit.

Transaction Types

The eNaira Guidelines recognises four transactions, each with its distinct available services. Subsequent types of transaction can be created subject to approval by the CBN.

Charges and Cost Structure

Charges for e-Naira transaction must be in line with the Guide to Charges by Banks, Other Financial and Non-bank Financial Institutions, 2020 (the “Guide”). There is no specific capture of charges for e-Naira transactions under the Guide since the Guide was released before the launch of eNaira. Given the nature of e-Naira transactions, a close charge rate provided for under the Guide is that of electronic funds transfer: ₦10 is charged for transaction below N5,000; ₦25 is charged for transaction over ₦5,000 but not more that ₦50,000; and any transaction above ₦50,000 attracts ₦50 charges.

Anti-Money Laundering/ Combating Financing of Terrorism (AML/CFT) Compliance

Financial institutions are required to comply with the provisions of the Money Laundering (Prohibition) Act 2011 (as amended), the Terrorism (Prevention) Act 2011 (as amended), and all subsisting anti-money laundering laws and regulations as may be issued by the CBN from time to time. eNaira Guidelines. This puts financial Institutions under obligation to put in place policies for detection of any money laundering and terrorist financing activity

Risk Management

Here, financial institutions are required to ensure that there are sound risk management procedures, that will address any threat that comes on.

Examples of such risks, includes:

a. Treasury Maintenance – Financial institutions here, have the duty to maintain the eNaira wallet, for holding and managing eNaira on the Digital Currency Management System (DCMS), if any financial institution fails to adequately maintain this treasury, there is risk of sanctions by the CBN.

b. Loss/Theft of eNaira wallets- The user may lose his/her device, and this means inaccessibility of the eNaira wallet/platform

c. Hacking- With the giant strides in technological advancements across the globe, hacking is a word a lot of people have become too familiar with. Sadly, the eNaira is also prone to being hacked by cyber hackers.

Is there a way out of all these?

Yes, the CBN guidelines has successfully provided for ways the highlighted risks could be mitigated. This includes:

a. Financial Institutions, ensuring there is an existing risk management framework

b. Financial Institutions, ensuring that an appropriate governance procedure exists

c. Documented and approved policies

d. Financial Institutions, securing their Information technology infrastructure (ITI).

e. From time to time, these financial institutions are also required to implement additional risk management measures, as may be prescribed by the CBN guidelines.

eNaira Wallet Recovery Process

Under this section of the guideline, the CBN provides different responsibilities for stakeholders, to ensure a prevention or minimization of loss of data, after a user’s device has been stolen or a hack of the eNaira wallet.

a. Banks

• Banks shall ensure that eNaira users have access to channels, to report such loss, theft, or hack. At the very least, banks shall ensure that customers can report via: USSD channels; internet banking platforms; customer care phone lines; and In-branch customer care.

• A system should be on ground, to identify the identity of the complainants. a KYC is suggested for this.

• Where such reports have been made, there should be an immediate restriction on those eNaira wallets to prevent loss of funds

b. eNaira wallet users

• Wallet users shall ensure the protection of the eNaira wallet login credentials and devices to prevent any third-party disclosure.

• Make a prompt report to Financial Institutions or the eNaira helpdesk where there has been a loss/theft of device or a user’s eNaira wallet has been compromised.

c. Merchants

• Merchants shall provide channels for eNaira payments at sales outlets.

Wallet Recovery

What an eNaira wallet is lost or hacked, what happens next?

In the event, that the device is lost or stolen, for a user to recover the eNaira wallet, the following must be done:

a. Download a new “eNaira Speed Wallet” from the app stores

b. Accept the terms and conditions of usage of eNaira

c. Create a new username and password

d. Input a two-factor authentication credential

Or even contact the Financial Institution for assistance.

If on the other hand, it is comprised, the user shall:

a. Request for a change of password using the forgotten password functionality in the eNaira app or using the USSD password change process

b. Select an appropriate password

c. Input username and password for existing users, and

d. Input a two-factor authentication credential

Or also contact the Financial Institution for assistance

Financial and Regulatory Reporting

Financial Institutions shall render returns to the CBN in line with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and as may be specified regularly