NIGERIA’s World Class Central Banking Infrastructure has Solutions to Accelerate Now into the Digital Age!
VTNETWORK LIMITED (VCASH) has successfully integrated the eNaira CBDC (central bank digital currency) and built APIs that connect eNaira to 15,000 banks in more than 120 countries. The company has made this API available to financial institutions in Nigeria to launch new services and comply with the Central Bank of Nigeria’s mandate that this new digital currency enables global trade and facilitates remittances. This internationalization of the eNaira is now awaiting final approvals from CBN.
The backstory: Dr. Peter Ojo, CEO of VCASH, applauds the effort of the CBN eNaira team for their consistency over an active engagement since 2019 when eNaira was in the early planning phases. At rollout in October 2021, the eNaira was limited to commercial banks, and it took another several months for this to be extended to mobile money operators and other fintech. This ‘second layer’ was spearheaded and built by the VTNetwork team in mutual collaboration with the CBNs eNaira team and other MMOs and went live first quarter of 2023. With eNaira now accessible to all stakeholders in the Nigerian financial ecosystem, the possibilities for innovation will begin to emerge and will extend to include unbanked Nigerians.
CBN granted VCASH a no-objection approval to pilot domestic eNaira transactions in October 2022, which led to more commercial banks and Fintech companies to consume these 2nd layer APIs, in other words, to connect their bank’s systems further.
The international trade features, however, require further CBN authorization to take off. Most banked Nigerians have yet to see much benefit domestically to the eNaira since Nigeria already has an instant banking environment, and one main domestic advantage of any CBDC is speed. In countries with slow banking systems, a domestic CBDC offers more. For Nigeria, the 2nd layer on top of the eNaira encompasses local and global commerce from inception, and both functionalities have symbiotic relationships.
The main sticking point to overcome for CBN is the FX rates at which CBN will allow an e-Naira exchange.
This is especially important with remittances as the World Bank estimates that a more efficient remittance process could bring billions of US Dollars into Nigeria. Thus to realize their vision of allowing eNaira to facilitate Foreign Exchange Transactions, i.e., “to allow consumers to enjoy speedy transactions across boundaries and a hitch-free foreign exchange,” CBN should further lean on the expertise of IMTOs (International Money Transfer Operators) like VCASH that have a deep alliance with global liquidity providers. As for the FX rate associated with remittances, the current policy puts the negotiation in the hands of recipients, who are literally handed US Dollars at a bank and who then exchange with a nearby Bureau de Change operator. In precisely this same way, but digitally, IMTOs can allow the parties involved in a remittance (sender and recipient) to select the rate that works for them. In other climes, exchange rates vary from bank to bank. However, liberalization and competitiveness drive down the rate automatically due to the market dynamics.
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eNaira CAN CONTRIBUTE TO THE ECONOMIC GROWTH, SOCIAL DEVELOPMENT, AND REGIONAL INTEGRATION OF NIGERIA.
Nigeria is the largest economy in Africa and one of the world’s most populous and diverse countries. It has a vast potential for trade and investment, especially in sectors such as agriculture, energy, manufacturing, services, and technology. However, doing international business with Nigeria can be challenging due to various factors such as infrastructure gaps, regulatory barriers, security risks, corruption, and currency volatility.
Therefore, improving the ease of doing international business with Nigeria is essential to unlock its full potential and benefit both local and foreign firms. Some of the ways to achieve this are:
• Enhancing the digital infrastructure and connectivity to facilitate online transactions and communication.
• Simplifying the tax and customs procedures and reducing the costs and delays associated with cross-border trade.
• Strengthening the legal and institutional framework to protect the rights and interests of investors and traders.
• Promoting transparency and accountability to combat corruption and improve the business climate.
• Supporting the development of skills and innovation to increase the competitiveness and productivity of Nigerian businesses.
By improving the ease of doing international business with Nigeria, local and foreign companies can enjoy more opportunities, lower costs, higher profits, and better customer satisfaction. Moreover, this can also contribute to the economic growth, social development, and regional integration of Nigeria and Africa.
Financial institutions that want to access the API can contact operations@virtualterminalnetwork.com for an initial consultation. However, they can only use the domestic transactions API until the international trade feature is approved, which is expected in due course.
Dr. Peter Ojo
CEO: VTNETWORK LIMITED (VCASH)
