The Central Bank of Nigeria (CBN) has announced plan to adopt the Unstructured Supplementary Service Data (USSD) code as part of ways to boost eNaira transactions, the Central Bank Digital Currency (CBDC).
CBN Says Introducing USSD Code Will Improve Enaira Transactions
CBN’s Deputy Governor, Dr Kingsley Obiora, disclosed the apex bank’s efforts to boost the eNaira trasactions at the IMF African Department Speakers Series held virtually at the weekend.
The series was focused on “CBDC and Private Digital Payments in Kenya and Nigeria: Challenges and Opportunities for Sub-Saharan Africa.”
The CBN inaugurated the CBDC, also known as the eNaira, on October 25, 2021, aimed at making financial transactions easier and seamless for every stratum of society.
Obiora 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.
The CBN deputy governor said that the barrier to entry on the CBDC platform was low, which, he said 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 in 2008 to about $2.4 trillion presently, adding that Nigerians were now used to digital payments.
“As you know, within the continent we have one of the largest Fintech companies, Futterwave, 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 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 the country was number one in terms of adoption, adding that the CBN would keep growing and improving on the system.
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