The Central Bank of Nigeria (CBN) has announced plans to introduce an unstructured supplementary service data (USSD) code to improve the adoption of its eNaira.
Kingsley Obiora, CBN deputy governor, said this at the International Monetary Fund (IMF) African Department Speakers Series held virtually on Friday.
The discussion, moderated by Abebe Selassie, director of IMF’s African department, was titled ‘Central Bank Digital Currency and Private Digital Payments in Kenya and Nigeria: Challenges and Opportunities for Sub-Saharan Africa.’
Obiora said the barrier to entry on the CBDC platform was low, which made it possible for everyone with a bank verification nmber (BVN) to join the eNaira platform in a few minutes.
He said the introduction of the USSD code is crucial to improve financial inclusion in the country and to ensure people without smartphones could still transact on the eNaira platform.
“We have made serious progress in the last seven to eight years because when the current governor resumed in 2014, one of the pillars of his vision was to significantly improve financial inclusion,” the apex bank deputy governor said.
“So at the time, we were at 48 percent of our population within the financial system and given several policies that he conceived and implemented, we are almost at 70 percent.
“That still leaves us with about 30 percent of our population out of the financial system and we believe the CBDC can help reduce that number even more.
“A lot of people might not have smartphones but that is essentially the next step of our improvement in the CBDC, to introduce the USSD code so those that do not have smartphones can still transact.
“Once we are able to introduce the USSD code, you don’t need a smartphone to join the eNaira platform, you can still join easily once you put in your BVN.”
The CBN official said the eNaira would provide significant benefits for Nigeria.
He listed the benefits to include rapid financial inclusion, reducing the cost of processing cash, enabling direct welfare payments to citizens, and reducing the informal economy.
Others are improving tax collection, boosting cross-border trade and remittances, reducing the cost, improving the efficiency of payments and engendering economic growth.
He, however, mentioned some of the key risks to introducing the CBDC to include banking sector disintermediation, operational risks of knowing that there is non-stop service, cyber security risks, internet disruptions and financial literacy.
Obiora said that Nigeria was doing well based on a PwC report which showed that Nigeria was number one in terms of CBDC adoption.
He added that the CBN would keep growing and improving its eNaira platform.
On the adoption of cryptocurrency in Nigeria, the deputy governor said it would not become part of the country’s financial system because of its volatility.