CEM REPORT, FINANCE | Nigeria is about to make history as the first African country to launch its own digital currency, the Nigerian naira (cNGN) stablecoin. The cNGN is a digital version of the naira that is backed by naira reserves held in designated commercial banks, and is powered by blockchain technology. The cNGN will enable Nigerians to send and receive money across the world, without the hassles of currency conversion, transaction fees, or delays.
The cNGN project is a collaboration between the Central Bank of Nigeria (CBN) and the Africa Stablecoin Consortium (ASC), a consortium of Nigerian financial institutions, fintechs, and blockchain experts. The CBN has approved the ASC to pilot the cNGN in its regulatory sandbox, a testing environment for innovative financial solutions. The cNGN is expected to launch on February 27, 2024.
The ASC announced the approval on its website, describing it as “a monumental shift in the financial landscape” of Nigeria. The ASC said the cNGN will transform the way people transact and engage with their money securely and seamlessly, and will revolutionise the dynamics of monetary transactions. The ASC said the cNGN will usher in a new era of financial fluidity, bridging the Nigerian naira with the global market through blockchain technology.
“This pivotal approval heralds a new financial chapter, with ASC, an alliance of prominent financial institutions, fintech innovators, and blockchain experts, set to transform the dynamics of monetary transactions. The consortium is committed to enhancing secure and compliant financial interactions, revolutionising the way people transact and engage with their money securely and seamlessly,” it added.
Benefits of cNGN
The cNGN will offer a range of benefits to Nigerians, both at home and abroad. According to the ASC, the cNGN will:
– Enhance financial inclusion and access, as Nigerians will be able to explore the world with cNGN and experience a seamless and cost-effective way to engage with a global marketplace, with the familiarity of their naira.
– Reduce the cost and time of international transactions, as cNGN will shorten settlement times and eliminate currency conversion and transaction fees, enabling payments that traverse the globe swiftly, mirroring the speed of a text message at a fraction of the cost.
– Support the Nigerian economy and trade, as cNGN will enable instant and secure payments across the globe, facilitating commerce, trade, and investment, and connecting Nigeria’s vibrant economy with international markets.
– Empower Nigerians to unleash their global hustle and get paid, anywhere, instantly, as cNGN will allow freelancers and entrepreneurs to receive payments from clients across the world, directly into their cNGN wallets, without the hassle of bank queues, paperwork, or hidden fees.
The ASC urged Nigerians to imagine their “Naira without Borders” and to use cNGN to fuel their hustle. The ASC also said it is committed to enhancing secure and compliant financial interactions, and to working with the CBN and other stakeholders to ensure the success of the cNGN project.
The cNGN is part of the global trend of central bank digital currencies (CBDCs), which are digital versions of national currencies issued and regulated by central banks. CBDCs are seen as a way to modernise the financial system, improve efficiency, and foster innovation. Some of the countries that have launched or are planning to launch their own CBDCs include China, Bahamas, Sweden, Japan, and the UK.
