Godwin Emefiele and CBN e-naira
Emefiele, CBN governor

By AYOOLA OLAOLUWA

A cloud of uncertainty is hanging over the Central Bank of Nigeria’s proposed digital currency, e-Naira, as the nation’s apex bank’s plans to float the new currency has experienced some hitches, Business Hallmark findings can reveal.

The apex bank, it would be recalled, had earlier in the year fixed October 1, 2021 for the launch of the currency after about four years of researching and seeking perfection for it.
However, the bank in a statement last Thursday, announced the postponement of the launch of the eNaira.

According to a statement signed by the CBN’s spokesperson, Osita Nwanisobi, the bank took the decision to postpone the launch in deference to the mood of national rededication to the collective dream of One Nigeria.

He said the bank and other stakeholders were working to ensure a seamless process that will be for the overall benefit of customers.

The CBN spokesperson, while noting that the bank been mindful of concerns expressed about the eNaira, had put a structure in place to promptly address any issue that might arise from the pilot implementation of the eNaira.

However, BH reliably gathered that the much anticipated launch was aborted due to some technical hitches experienced prior to the launch, as well a a legal suit that is posing a threat to the successful birth of the currency.

Reliable sources in the know confided in BH that the e-Naira platform received a huge and unexpected traffick that left the CBN management with no option than to shut down the platform to prevent a crash.

This suspension, the sources claimed, also led to the postponement of the launch date.

“We were prepared to launch the eNaira on the 1st of October 2021 as planned, but the unexpected happened, forcing a postponement.

“The eNaira website recorded about 480,000 hits the first day it went live on September 27. The visits grew to over 1.7 million the next day and has continued to averaged over 2.8 million hits daily since then.

“Apart from attracting hits, the website also recorded a surge in usage with the time spent on the site generating content of over 80 GB daily.

“The unexpected and sustained surge in traffic on the website, which is over 1,000 percent more than what we envisaged, made us to advice the CBN management to postpone the official launch for us to conduct another stress test on our systems to ensure it is capable of withstanding a further surge in traffic when they go live.

“For the launch to go ahead, the system must past a strenous test that it can withstand a surge in visits”, one of the systems engineers contracted by the CBN for the eNaira project confided in our correspondent.

While the CBN was still battling to resolve the techical hitches that is threatening to shut down its systems, another crisis that may derail the take-off of the new currency, except all conflicts are resolved soon, reared its head when a firm, ENaira Payment Solutions Limited, launched a legal challenge against the bank for stealing its brand name, e-Naira.

ENaira Payment Solutions, through its solicitor, Olakunle Agbebi & Co, accused the CBN of trademark infringement, warning the bank to desist from using the proposed name.

“We are Solicitors to ENAIRA PAYMENT SOLUTIONS LIMITED (RC 508500) which was incorporated on the 7th of April, 2004.

“Our client is and remains a valid and existing legal entity having complied with the statutory requirements as regards the filing of its annual returns and the payment of company income tax.

“Our client is the holder of the Trademark “ENaira” registered in Class 36 and Class 42. It has come to our client’s notice that the Central Bank of Nigeria (CBN) has announced the planning launching of a financial under what it termed its Central Bank Digital Currency to be known as “eNaira.’

“This action amounts to a threat to willfully infringe on our client’s Trademark. It will also amount to a violation of its corporate name i.e. ENaira Payment Solutions Ltd. The ramifications of this illegal act of the CBN are extensive.

“Importantly, the potential this has to deceive the general public into believing that this product emanated from our client’s company is real and the consequences for our client are grave. The potential to expose our client to all manner of damage, loss of business and loss of goodwill is also very real.

“For this reason, our client has approached the federal high court in suit No. FHC/AB/CS/113/2021 between ENaira Rayment Solutions Limited v Central Bank of Nigeria to seek restraining orders, including an order to restrain the CBN from proceeding with the proposed launching on the 1st of October 2021.

“The CBN is hereby put on notice of the pendency of this suit and advised not to resort to self-help or present the honourable court with a fait accompli by proceeding with the proposed launching pending the hearing and determination of this suit.

“In the interim, the CBN is hereby warned to cease and desist from using or purporting to use the name “eNaira” for its product or in any way, form or manner infringing or threatening to infringe on our client’s Trademark or violating our client’s corporate name”, the legal firm said.

However, the CBN got a temporary relief when a Federal High Court in Abuja ruled that the launch could go ahead in the national interest and on the basis that the plaintiff shall be adequately compensated if he eventually win the case. The case was subsequently adjourned to 11 October.

Meanwhile, the CBN is putting everything in place to ensure the successful takeoff of the currency. BH learnt that apart from the foreign firm contracted to design, execute and run the project, over 12 directors and 75 staff of the bank are directly involved in ensuring the digital currency is successfully launched.

The team, it was gathered, is housed in a secure location and working hard to ensure a hitch-free operation.

Also, in readiness for the launch, money had already been printed and wallets already active with selected users who are directly involved in the launch.

It would be recalled that the CBN had in February stopped commercial banks from accepting cryptocurrencies, claiming the virtual currency was not yet insured or regulated in the country. It expressed worry about illicit flows of cash and the ability of cryptocurrencies to travel in and out of Nigeria unannounced and untaxed.

Smarting from the knocks and condemnations that greeted the order, the apex bank, in a radical departure from its initial warning to Nigerians to stay away from the digital currency space, announced that it was considering producing its own digital currency.

The CBN said the digital currency which was conceived as far back as 2017 was renewed and accelerated earlier in the year after it stopped financial institutions from processing cryptocurrency-related transactions.

While disclosing that the currency would be launched on October 1, 2021, CBN said its decision followed the significant explosion in the use of digital payments and the rise in the digital economy with over 85 per cent of central banks around the world contemplating CBDCs.

After a long period of inactivity and troubling silence from the apex bank, which brought about doubts on the viability of the currency, the CBN, in a flurry, announced numerous decisions taken to ensure successful take off of the currency.

One of them is the release of drafts guidelines on e-Naira to participating banks on August 29. According to the draft document to banks seen by Business Hallmark, the e-Naira which is a legal tender and exchangeable in all the 36 states of the federation and the Federal Capital Territory (FCT), will have non-interest-bearing CBDC status, a transaction limit for customers and a value-based transaction limit.

The e-Naira has five features. They are Monetary Authority Suite; Financial Institution Suite; eGovernment Suite and the Retail Consumer Suite.

Under the Monetary Authority Suite, the CBN will be tasked with handing the first product component. These include issuing, distributing, redeeming and destroying the currency.

Other duties of the apex bank are storing data on a cloud server, as well as monitoring and analysing currency transactions.

On the other hand, the Financial Institution Suite is reserved for licensed financial institutions who will be able to request currency or issue stablecoins, manage digital currency across branches, Know Your Customers (KYC) and AML compliance capability.

While the eGovernment Suite is available to the government to process digital payments sent to and received from individuals and businesses.

Under the suite, merchants will provide low-cost payment and business management software, POS, remote payment solutions, online capabilities, transaction analysis and reconciliation.

Lastly, the Retail Consumer Suite contains features user-centred designs for customers seeking efficient user experience. The architecture will be expandable to enable innovation; features advanced privacy and security.

Apart from the main features of the program, the CBN also outlined the transaction cost for the e-Naira wallet.

While the digital currency infrastructure does not charge for user-to-merchant transactions and P2P wallet transactions, participating banks have the responsibility to promote and market the centrally issued digital currency as a cash alternative to existing and potential customers.

Banks will be allowed to invite all their customers to register for the e-Naira. Besides pre-generated codes, the banks ate allowed to send invitation codes for onboarding to a specific list of selected customers. Onboarding will be done for customers who have a code assigned by their banks.

The CBN, however, stated that the wallet provided by it was merely a stop-gap measure for meeting the deadline, noting that banks and other licensed operators will provide their own wallets since it didn’t intend to compete against them.

The draft guidelines also indicates that there will be four tiers of wallets, Tier 1, Tier 2, Tier 3 and Merchant.

Customers on Tier 1 do not need to have existing bank account, but their phone numbers must be validated by National Identity Number (NIN). The tier also put cumulative balance limit at N300,000 and transfer limit at N50,000.

Customers on Tier 2, however, must have existing bank accounts and Bank Verification Numbers (BVN). While cumulative balance limit is N500,000 and transfer limit maximum of N200,000.

The premium tier, Tier 3, requires N5,000,000 cumulative balance limit and N1,000,000 transfer limit.

On the other hand, Merchant has no minimum balance limit, but a holder cannot transfer above N1,000,000 daily. Requirements needed to operate the account is however stringent. These include full KYC requirement and anti-money laundering and counterfeit terrorism regulation of the CBN.

Also on August 31, the CBN announced that it had engaged Bitt Inc, a Barbados-based digital financial technology firm as technical partner for the project.

According to the Director, Corporate Communications, CBN, Osita Nwanisobi, Bitt Inc was chosen through a highly competitive bidding process.

“In choosing Bitt Inc, the CBN relied on the company’s tested and proven digital currency experience, which is already in circulation in several Eastern Caribbean Countries.

“Bitt Inc. was key to the development and successful launch of the central bank digital currency (CBDC) pilot of the Eastern Caribbean Central Bank (ECCB) in April 2021,” Nwanisobi had stated.

Check on the firm’s website indicates that it utilises blockchain and distributed ledger technology to facilitate peer-to-peer (P2P) transactions with mobile money across a suite of software and mobile applications.