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CHAPTER ONE
INTRODUCTION
Background Of The Study
Digital currencies are money that exist entirely as electronic data and do not exist in physical form, but serve the core functions of money, such as being a unit of account, a store of value, and a means of exchange. As a result, digital currencies will continue to be desirable for inter-party transactions as long as the parties recognize the currency’s validity, as they have the advantage of speedy settlement, particularly in online communities. According to Charles (2018), digital currency is a digital representation of either virtual currency (non-fiat) or e-money (fiat) and is thus usually used interchangeably with the word virtual currency. Globally, the financial sector has unquestionably embraced the present transition from physical currency to practically digital currencies via technology. Hence, given the expanding use of digital currency dispensation, various governments across the world, including Nigeria, have expressed interest in digital currency operations, with the CBDC option emerging as the perfect starting point for Nigeria (Emeka, 2021). This comes after the country banned cryptocurrency in February 2021.
With the Nigerian government realizing the global and economic relevance of digital currencies, as well as their relevance to the Nigerian fiscal system, it has launched a digital currency platform called eNaira for its currency, following the adoption and acceptance of digital currency in China and other countries around the world (Seun Opejobi, 2021). According to CBN (2021), Nigeria’s digital currency (eNaira) is a legal tender, which must be recognized as a means of payment by merchants and business organizations in the country. Furthermore, the CBN stated that e-Naira will act as an e-wallet against which individuals and businesses can hold existing funds in their respective bank accounts. Moreso, the currency would enable cheaper and faster remittance inflows (Ayodeji, 2021). Itย would also allow enterprises to undertake cross-border transactions which is likely toย attract foreign investment. Considering that transactions in this manner take place without any physical exchange of monies, the platform would alleviate business owners and their consumers from the risk of money robbery that is endemic in Nigerian society, in addition to facilitating faster transactions. In light of the preceding, the goal of this research is to analyze the relevance of the eNaira digital platform to cooperative organizations in Nigeria.
ย Statement Of The Problem
The cash-based monetary system has always been prone to corruption and illicit gains, and Nigeria is no different. As stated by UNB (2021), cash is the most popular strategy of money laundering. In hindsight, digital currency enables improved security and traceability options for currency which a cash system cannot guarantee. Furthermore, one of the usual economic fallacies that the government experiences is the hoarding of cash during a downturn. With less control over physical cash, the central bank’s ability to cut interest rates to promote the economy is becomes increasingly difficult when it faces a cash shortage (UNB, 2021). However, in a cashless digital world, the idea of cash hoarding will be made obsolete. Banks and other business entities will be able to have more control over the monetary system and better handle economic downturns.
Having acknowledged the usefulness of digital currency, as well as its relevance to the Nigerian financial system, the Nigerian government has successfully designed a digital currency called eNaira.
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The eNaira platform is a digital platform which can be advantageous to business organizations in the smooth running of daily business transactions. Business organizations seek rapid, safe, easy, and dependable modes of payment, of which the eNaira is coined to meet these essential needs. (Seun, 2021). In addition, the eNaira platform acts as a platform for business organizations to store value in Naira. By exploring this platform, business organizations through receiving and storing money on the eNaira platform, would limit to a considerable extent the fraudulent activities that they have experienced over the years (Ayodeji, 2021). Furthermore, the eNaira platform includes a system that facilitates foreign transactions, allowing business organizations to perform foreign transactions safely and affordably from Nigeria and other parts of the world (Emeka, 2021). In the light of this , the study is set to critically analyze the relevance of the eNaira digital platform to cooperative organizations.
Objective Of The Study
The major aim of this is to examine the relevance of the eNaira digital platform to cooperate organizations. Specifically, the study is set to:
1.ย ย ย ย ย ย ย Examine whether the utilization of the eNaira platform will ensure easy and fast financial transactions for business organizations.
2.ย ย ย ย ย ย ย Examine if the eNaira platform can be used by business organizations to store and secure business revenue.
3.ย ย ย ย ย ย ย Examine whether the utilization of the eNaira platform will reduce fraudulent occurrences in an organization.
4.ย ย ย ย ย ย ย Examine if the eNaira platform offers business organizations reliable access to cross-border transactions and foreign investments.
Research Hypotheses
The study will test the validity of the following statements;
H01:ย The utilization of the eNaira platform can not ensure easy, and fast financial transactions for business organizations.
H02:ย The eNaira platform cannot be used by business organizations to store and secure business revenue.
H03:ย The utilization of the eNaira platform cannot reduce the rate of fraudulent occurrences in an organization.
H04:ย The eNaira platform cannot offer business organizations reliable access to cross border transactions and foreign investments.
ย Significance Of The Study
The relevance of this study is clear for business and cooperative organizations, particularly for managers and other key officials. This is because the result of this study will apprise them of whether or not the utilization of the eNaira platform can ensure easy and fast financial transactions for business organizations. And if the eNaira platform can or cannot be used by business organizations to store and secure business revenue, the study will also enlighten them on whether or not the utilization of the eNaira platform will reduce fraudulent occurrences in an organization. They will also be educated on whether the eNaira platform offers business organizations reliable access to cross-border transactions and foreign investments. In addition, the study will contribute to the body of existing literature on this area of study, which will serve as a source of information to students and other researchers who may be carrying out research on related topics.
Scope Of The Study
This study will be limited to analyzing the various ways in which the eNaira platform will or will not be useful to cooperate and business organizations by studying the efficacy of its proposed services. The study will therefore be delimited to selected insurance firms in Lagos State, Nigeria.
Limitation Of The Study
This study is delimited by various factors, ranging from the time frame of the study, financial implications necessary for the success of this study, and inadequate availability of materials needed to carry out the study. Furthermore, ethical issues and organizational politics that arose during the course of this study posed an impediment to this study.
Definition Of The Terms
Digital Currency: Digital currencies are monies that exist not in physical form but only as electronic data, but perform the basic functions of money being unit of account, store of value and means of exchange.
eNaira: eNaira is the name given to the CBN’s first proposed digital currency.
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