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CBN moves to introduce USSD code to boost digital currency transactions

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Nigeria’s financial sector regulator, the Central Bank of Nigeria (CBN) has said that it plans to introduce the Unstructured Supplementary (USSD) code as part of steps to improve its digial currency, the eNaira.

The Deputy Governor of the CBN, Kingsley Obiora, who disclosed this at the IMF African Department Speakers Series held virtually on Friday, said the introduction of the USSD code became necessary to improve financial inclusion in the country and to ensure people without smartphones could still transact on the eNaira platform.

“We have made serious progress in the last seven to eight years because when the current governor resumed in 2014, one of the pillars of his vision was to significantly improve financial inclusion.

“So at the time, we were at 48 per cent of our population within the financial system and given several policies that he conceived and implemented, we are almost at 70 per cent.

“That still leaves us with about 30 per cent of our population out of the financial system and we believe the CBDC can help reduce that number even more.

“A lot of people might not have smartphones but that is essentially the next step of our improvement in the CBDC, to introduce the USSD code, so those that do not have smartphones can still transact,” Obiora said.

READ ALSO: Amaechi, Cole to face prosecution over N96 bln alleged fraud in Rivers State

The CBN deputy governor said that the barrier to entry on the Central Bank Digital Currency (CBDC) platform was low, which made it possible for everyone with a Bank Verification Number (BVN) to be onboarded into the eNaira platform in a few minutes.

Obiora said the value of the country’s digital payments grew from 324 billion dollars in 2008 to about 2.4 trillion dollars presently, adding that Nigerians were now used to digital payments.

”As you know, within the continent, we have one of the largest Fintech companies, Flutterwave, Paystack, etc, “ the apex bank boss added.

He said that the CBDC had significant benefits for Nigeria, which was why the CBN decided to introduce it.

Obiora listed the benefits to include rapid financial inclusion, reducing the cost of processing cash, enabling direct welfare payments to citizens, and reducing the informal economy.

Others are improving tax collection, boosting cross-border trade and remittances, reducing the cost and improving the efficiency of payments and just endearing economic growth in general.

He, however, listed some of the key risks to introducing the  CBDC to include banking sector disintermediation, operational risks of knowing that there is non-stop service, cyber security risks, internet disruptions and financial literacy.

Obiora said that Nigeria was doing well based on a PwC report, which showed that Nigeria was number one in terms of adoption, adding that the CBN would keep growing and improving on the system.

Speaking on adopting cryptocurrency in Nigeria, the deputy governor said for now it would not become part of the country’s financial system because of the volatility that it could create for the system.

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