CBN’s $800m Cash Transfer Proposal: Another eNaira Masterstroke in Financial Inclusion

CBN’s $800m Cash Transfer Proposal: Another eNaira Masterstroke in Financial Inclusion

By Abdulrahman Abdulraheem

In my article titled, “eNaira: Simplifying Financial Inclusion for the Downtrodden” published on March 27, 2023, I wrote on President Muhammadu Buhari’s determination to tackle three major problems confronting Nigeria in 2015. The President campaigned with a three-point agenda to fight corruption, stamp out insecurity and fix the economy.

In that piece which was published by PRNigeria, Economic Confidential, Daily Trust and The Nation, I wrote more elaborately on the President’s vision to fix the economy along the line of scaling up infrastructural development, opening up the economic space for more investments, creating jobs and tackling poverty. Aside hoping that the above policies would in the long run reduce poverty, the President and his team also came up with some social security policies that will assist the poorest Nigerians whose extreme poverty cannot wait for that long run.

The goal of the social investment programmes especially the Conditional Cash Transfer (CCT) was to ensure that cash gets to the hands of the poorest Nigerians in the hinterlands so they can at least feed and buy medicine when they are ill. This lofty vision of financial inclusion is what the eNaira revolution has come to help the federal government in achieving.

As I noted in the March 27 piece: “As part of measures to simplify financial inclusion for the disadvantaged Nigerians, President Buhari launched the eNaira in October, 2021. Since its launch, the eNaira has proven to be a multi-dimensional digital currency that operates as a better alternative to the physical currency.

“According to the visioner, the CBN governor, Godwin Emefiele, the eNaira was introduced to act as a store of value and a medium of exchange that is easier, faster, cheaper and less cumbersome to use in sending and receive money.

“The eNaira has demonstrated incredible capacity to do all things and solve all problems at micro and macro levels. The eNaira platform enhances payment of bills, airtime recharge, health insurance, tax collection, diaspora remittances etc.

“The Ministry of Humanitarian Affairs, Disaster Management and Social Development has also been taking advantage of the eNaira platform to simplify the process of reaching out to the poorest Nigerians with life-saving funds.

“The Permanent Secretary in the Ministry, Dr Sani Gwarzo, in a recent chat with ECONOMIC CONFIDENTIAL revealed that his Ministry, in collaboration with the CBN, registered about 1.9 million beneficiaries of their social intervention schemes on the eNaira platform.

“He said long before the CBN recently started a robust campaign to promote the e-Naira, the Ministry had deemphasised doling out cash to the beneficiaries of their interventions and embraced internet banking.

“He added that after the CBN introduced the eNaira as a form of digital currency, it approached the Ministry with a proposal to take advantage of it to pay its beneficiaries, adding that so far, the eNaira has been the biggest discovery of the Ministry since its establishment.

“When the CBN approached us on this issue of eNaira, we listened to them and held a series of meetings with them. There were lots of back and forth and arguments and counter arguments but since we got started our experience so far has been huge. In fact, I have been asking myself why didn’t this idea of eNaira come to Nigerians long before now?

“Within a period of one month, we were able to register about 1.9 million of our beneficiaries on the e-Naira platform and we will do more,” he said.

He continued: “Nigerians are only complaining about the cashless system because they have not fully embraced the e-Naira but the time will come that everyone will be on it and we will start asking ourselves why didn’t we do this decades earlier?”

“According to him, the eNaira has a lot of advantages for which Nigerians will be grateful to the CBN when they fully embrace the idea.

“Listing some of the advantages, he said it is easier and cheaper to operate, no bank charges, bottlenecks and intermediaries and unlike commercial banks there is no chance of depositors losing their monies since the CBN cannot fold up. And with all the above advantages, the poorest Nigerians who mostly live in the hinterlands where the infrastructure necessary for physical and internet banking may not be present, are the biggest beneficiaries of the eNaira revolution.

“Corroborating the Permanent Secretary, the CBN governor told journalists after the Monetary Policy Committee (MPC) meeting last month that part of the fundamental reasons for the eNaira innovation was the need to get more poor people into the financial system, in collaboration with the Ministry.

“We have seen good progress in the adoption of the e-Naira. We are happy that as we try to move more and more towards financial inclusion, and get people away from being excluded in the financial system, the eNaira remains one of the very portable options for all to adopt.

“The e-Naira has emerged as the electronic payment channel of choice for financial inclusion and targeted social intervention programmes. The Ministry of Humanitarian Affairs, Disaster Management and Social Development therefore expressed keen interest in the e-Naira product and adopted it for payment,” Emefiele said.

“Consequently, Emefiele said as at March 20, 2023, approximately four million wallets had been created for social intervention payment representing about 30 per cent of total wallets created so far.”

He said: “These wallets were created in response to a request from the Ministry as part of plans for the next tranche of conditional cash transfer programme by the second quarter of 2023.”

The $800m Masterstroke

While observers and stakeholders are still basking in the euphoria of the above impressive progress report, it is obvious that the CBN is not resting on its oars in its determination to get the issues of cashless economy and financial inclusion over the line.

The CBN has elevated the conversation beyond the pedestrian with its latest
suggestion of the use of eNaira for cash transfers during the National Social Safety Net Programme Scale Up.

This was according to the National FinTech Strategy document obtained from the website of the CBN.

The strategy document was created by the National Financial Inclusion Steering Committee, chaired by the CBN Governor, Emefiele.

The document, seen by ECONOMIC CONFIDENTIAL, revealed that the eNaira can be pre-programmed for payments to the poor and vulnerable on the social register.

“The Central Bank can use a pre-programmed eNaira to pay intended beneficiaries on the social register, which could be accepted only for a specific purpose and at specifically authorised locations.

“This use case will ensure the proper use of social funds, ensure high-quality data can be collected on the performance of these programs, and help to prevent leakage or diversion of funds. This capability could be extended to other use cases in financial services and related ecosystems, where there exists a priority to maintain the integrity of funds and the purpose for which it is used,” the document read in part.

“In Nigeria, the eNaira objectives include monetary policy effectiveness, financial inclusion, payments and remittances efficiency (domestic and cross-border) and government payments,” the document added.

The National Social Safety Net Programme Scale Up, which will cost $800m, is expected to take off in 2023 pending National Assembly’s approval.

According to the World Bank’s website, the NASSP-SU was approved by the bank on December 16, 2021, and will run till June 30, 2024.

The $800m programme is to be implemented by the Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development.

Data from the National Social Safety Net Coordinating Office show that there were about 12.06 million poor and vulnerable households, which include 49.81 million individuals in its database.

In January last year, the National Coordinator, National Social Safety Nets Coordinating Office, Mr Apera Iorwa, said that the Federal Government disbursed about $300m to the poor and vulnerable in its National Social Register through N5,000 cash transfers in four years.

He also disclosed that two million households had benefitted on an average of five individuals per household, which is about 10 million individuals.

The NASSCO was established in 2016 by the Federal Government, alongside the World Bank, to strengthen the social safety nets and social protection system in Nigeria in order to help end extreme poverty and promote shared prosperity.

The World Bank offered a credit of $500m to support the social safety net programme, which ended in June 2022.

However, Iorwa disclosed that another $800m had been approved by the World Bank to extend the support programme to 2024 in a way that would benefit 8.5 million more Nigerians.

There is no doubting the fact that the eNaira revolution is coming at the right time. With the renewed vigour of the federal government to take advantage of it to pursue the goal of financial inclusion for the downtrodden, Nigeria’s cashless future is assured.