ZLECAf: central bank assures e-Naira would increase cross-border trade and tax efficiency
Eromosele Abiodun, James Emejo and Nume Ekeghe
In the wake of the implementation of the African Continental Free Trade Area (AfCFTA), the Central Bank of Nigeria (CBN) said another component and incentive of E-naira, scheduled to launch soon, would be its ability to improve tax efficiency and improve cross-border trade.
Monetary Policy Department Director Dr Hassan Mahmud said yesterday at the 31st Seminar for Financial Correspondents and Business Editors in Enugu, where stakeholders converge to discuss “Trends in the Nigerian System: regulate the digital fintech playground ”.
Virtually presenting his article titled Implications of Digital Financial Ecosystem Trends for Monetary Policy Implementation, Mahmud said that part of the motivation to launch digital currency is the ability to help cross-border trade and ” improve tax efficiency, among others.
He said: “The Central Bank of Nigeria, in partnership with Bitt Inc., an international financial technology company, to launch its digital currency, e-Naira, which would increase cross-border trade, accelerate financial inclusion. , would get cheaper and faster. cash inflows. This would help facilitate targeted social interventions, improve the effectiveness of monetary policy, the efficiency of payment systems and the efficiency of tax collection. “
He further noted that the CBN digital currency will provide value parity and function as a non-interest bearing asset and that Nigeria’s digital currency will operate under a tiered anti-money laundering structure. and Know Your Customer (AML / KYC) with different transaction limits.
He added: “The AML / KYC pyramid would encompass unbanked citizens to provide their phone numbers linked to their national identity for verification purposes and users in this category will be limited to a daily transaction limit of N50,000 ( about $ 120). “
He further added that the Fintech space in Nigeria is growing rapidly and that the Nigeria Fintech landscape is estimated to consist of around 250 Fintech.
He added: “From 2014 to 2019, the Nigerian Fintech scene raised more than $ 600 million in funding and its main functions have been to facilitate payments using wallets, processors and merchant service providers for maintenance of mobile, national and cross-border transactions.
“Savings and wealth management platforms offering investment options in various industries. The personal and MSME lending business provides instant, unsecured and short-term loans to retail clients by leveraging alternative credit scoring algorithms and data and automating processes for personal finance, solutions merchants and financial institutions.
Central Bank of Nigeria (CBN) Governor Godwin Emefiele stressed at the event on Tuesday the need for increased and intensive regulatory oversight by regulators to proactively monitor developments in the systems electronic and digital payment amid the growing impact of FinTech companies.
He said regulators must also ensure the continued safety and soundness of the financial ecosystem, adding that by its demographic estimates alone, the country remains poised to be an active playground for digital transformation and cannot afford to be. allow the FinTech challenge to be ignored.
This is how he also clarified that contrary to speculation, the planned unveiling of the Central Bank’s digital currency (CBDC) also known as eNaira, would not exacerbate inflationary pressures on the economy.
The Governor of the CBN noted that discussions have intensified around the issue of the digital economy as more and more opportunities have presented themselves to financial institutions and other players in the payments ecosystem to innovate. and provide more efficient options for payments and settlements.
Emefiele, spoke in Enugu State while declaring open the 31st CBN Seminar for Financial Correspondents and Editors, on “Nigerian Payment System Trends: Regulating the Digital Fintech Playground “.
He said, however, that regulators must keep pace with these exponential developments in the digital financial landscape and take advantage of new knowledge and technology tools to improve the efficiency and effectiveness of their mandate.
He stressed that clearly, the digital revolution will remain a priority for financial institutions in the months to come, thus making Fintechs a major driver of the industry.
Represented by CBN Deputy Governor, Business Services Directorate, Mr. Edward Lamekek Adamu, the boss of apex bank said technology has continued to change the face of the financial services industry, adding that the advent digital financial services had created faster, more efficiently and generally cheaper transactions compared to traditional financial services.
According to him, “As the global economy recovers from COVID-19, it is evident that Fintech will play a greater role in a resilient and sustainable recovery.
“Studies have already shown that only 1% of Fintechs have been severely affected by COVID-19 and 2% severely affected. In comparison, about 17% of other high growth companies fall into these categories. It is therefore not surprising that many Finfechs have seen an increase in demand as the working practices and banking habits of clients have changed.