By Adefolarin A. Olamilekan
All things being equal, as the CBN eNaira launch date of October 1, 2021 set. Whether Nigerians are ready for the e-naira, and not doubting it technological efficacy is a question many contemplate on. However, as part of the apex bank enlightenment campaign and educating Nigerians on the e-naira. The Central Bank of Nigeria in a recent statement, as reported in the media, said “the CBN digital currency is not what every country has implemented. We are blazing the trail in Africa. Nigeria is the only country in Africa that is doing it. And so many advanced countries are not doing it,”
It added that “Today, anywhere you present naira to pay, compulsorily it must be accepted because that is our fiat currency, in the same way naira is accepted that you can’t reject it, is the same way e-naira must be accepted. In addition, the apex bank said” similar to the fiat currency (naira), the CBN bears all liabilities for the eNaira. “The liability of the enaira money is directly on CBN, which is similar to the cash we hold. The liability of the cash we hold today rests with the CBN. So, it gives Nigerians the opportunity to bank with CBN,”
On its benefits, the CBN said eNaira would save the cost of printing new naira notes. As the “minting of enaira is electronic and charges of transferring funds would be lower for those using the enaira”. Interesting, eNaira according to CBN is going to be a “game changer that would provide an alternative payment system and would radically transform the payment landscape”.
Irrefutably, the CBN could be right on the issues of cost of printing fiat naira notes. Over the years, concerns around unwieldy portability, the acrimony associated with shortage of change for small transactions, the inflationary push associated with product pricing, the rapid deterioration of both paper and polymer notes. This are genuine take, however, far from the above reasons, the worries, about fiat naira’s purchasing power been affected by double-digit annual inflation rates, are equally significant challenges to the current Naira profile.
Undeniably, some analysts have argued if the eNaira can enhance the value of fiat Naira? Especially going by current fraught performance of the naira. Regrettably, the travails of our national currency didn’t start today. it abysmal depreciation dated back to 1986 with the introduction of Second Tier Foreign Exchange Market, SAPs policies, our import dependent economy, petrol dollar (mono-cultural economy),structural deficit productive sector lacking the integration of primary, secondary and tertiary of agrarian and mining sectors. All this are compounded by lack of visionary leadership that is not bold in action.
Instructively, to enhance the value of the naira, diversifying our economy to produced more, earning additional export revenue and competitive against import substitutes have all been suggested. Appreciably, the creation of eNaira is a welcome development, especially as we witness the current mangers of the nation’s monetary policy take a bold and proactive steps.
Conversely, if the root causes of our economy’s incurable double-digit annual inflation rate remain unresolved, the purchasing power of the eNaira would also be rapidly eroded, making our Naira a poor store of value. Incontrovertibly, we understand the monetary policy ideas behind eNaira; our task to bring back fiat naira to a more valuable national currency of pride is more tasking. The constant burden of supply deficit of the dollar, (which must be contained to restrain inflation); demand- supply facilitated by conscious manipulation of speculators and black marketers of undoubtedly creates this scenario.
As a result, the systemic paradox of a weakening Naira despite increasing reserves, ultimately, makes our currency less desirable to hold as a safe store of value. This in the last couple of days the apex back has taking a stringent measures and it is laudable.
The Naira has unexpectedly depreciated, as our dollar reserves climbed from less than $4bn in 1996 to over $50bn in recent years. Therefore, the appropriate re-positioning of the current fraught the of Naira exchange rate to other currencies is not the task to be left for the CBN alone.
The Nigerian state and her Economic Team should have a short and snappy plan to revamp the economy, progressively but without doubt. The manner our economic diversification policy is been engage is not achieving the needed result. How come crude oil still accounts for 90 per cent of the total export despite abundance of mineral resources, cash crops and other commodities that are mega earners in other places?
In retrospect, there is no sensible reason and explanation why the Nigerian state cannot launch simultaneous monetary and fiscal policies to redeemed the domestics’ economy. More importantly, the Buhari administration should have more than a passing interest in alleviating sufferings of the Nigerian masses. It is well noted that the critical function of the Central Bank of Nigeria (CBN) crisscrosses regulating interest rate, inflation and foreign exchange.
The Federal Government and its economic team should sit up and get real. Despite the enormous advantages and the positive impact said to be associated with liberalizing the welfare of the masses is still at hefty. For us, a hearten industrial capacity utilization and expansion would ensure a realistic and stabilize naira exchange rate and drastically check inflation.
As foremost Nigerian Economist late Henry Boyo would say” I am a proud and patriotic Nigerian and the battle against the dollarization of the economy… is one that is aimed at nairanisingit” And this we stand for!
