CBN Introduces Use of eNaira for Diaspora Remittances

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) has announced the introduction of its digital currency, known as the eNaira, as a payment option to recipients of diaspora remittances.

The apex bank said the move was in furtherance of efforts to liberalise the payout of diaspora remittance.

The new policy was contained in the bank’s circular titled Operational Framework for eNaira Payment Option to Recipients of Diaspora Remittances, dated June 15, 2023.

In the circular addressed to the International Money Transfer Operators (IMTOs) and the public and signed by CBN Director, Trade and Exchange Department, Dr Ozoemena Nnaji, it was disclosed that this would facilitate the payment of proceeds of diaspora remittances to recipients who choose eNaira as a payment alternative.

Under the guidelines, the IMTOs are required to apply for a one-time “No-Objection” to pay out in eNaira from the Central Bank of Nigeria (CBN).

The banks were instructed to provide account details where foreign currency from IMTOs shall be received.

The CBN, however, stressed that the receipt of proceeds of diaspora remittance in eNaira remained optional, adding that the option of the digital currency payout shall run concurrently with the Dollar payout.

According to the framework, IMTOs are required to open merchant wallets through the CBN and pre-fund the CBN account with foreign currency.

The central bank will consequently fund the IMTO merchant wallet with eNaira equivalent of the foreign currency earlier pre-funded by the latter.

The CBN further explained that the payment procedure should involve a sender initiating a diaspora transfer with an IMTO of choice overseas, providing details of the beneficiary’s wallet.

The IMTOs will then log into the eNaira web wallet portal, debit its eNaira merchant wallet, and credit the beneficiary with the eNaira equivalent of the foreign currency sent at the origin at the I&E window rate.

Inversely, the apex bank noted that IMTO could integrate with the eNaira portal from its platform via API provided by CBN and initiate the transfer of eNaira equivalent of the foreign currency sent at the origin at the I&E window rate.

An initiative of the central bank, eNaira was unveiled on October 25, 2021, by former President Muhammadu Buhari to drive a more cashless, inclusive, and digital economy as well as complement the gains of previous monetary policy measures and fast-growing payments platforms.

However, the digital currency has not seen much adoption as many Nigerians opt to use fiat or cryptocurrencies, despite the latter being banned by the apex bank.

According to the apex bank, the eNaira remains the country’s digital equivalent of the physical Naira.

“The eNaira – like the physical Naira – is a legal tender in Nigeria and a liability of the CBN.

“The eNaira and Naira have the same value and will always be exchanged at 1 Naira to 1 eNaira,” the bank noted.