(PDF) An Assessment of the Relevance of E-naira Platform to Smes in Nigeria

CHAPTER ONE

INTRODUCTION

Background Of The Study

Apparently, the global financial system is embracing the present technological transformation from physical cash to practically virtual currencies. The birth of digital currencies has been ushered in by this wave. According to Charles (2018), digital currency is a digital representation of either virtual currency (non-fiat) or e-money (fiat), thus the terms virtual currency and digital currency are commonly used interchangeably. In the light of the evolution of digital currencies, there has been a lot of positive discourse on the relevance of digital currencies to the Nigerian fiscal system, following the adoption and acceptance of digital currency in China and other few countries in the world (Ayodeji, 2021). However, following the ban of digital currencies, specifically cryptocurrencies, in Nigeria by the apex bank, which appeared unprofessional to the citizens and business operators, as the ban threatened the survival of multiple business entities and resorted to the loss of a source of income of many unemployed and employed citizens, the central bank of Nigeria (CBN) adopted China’s idea of developing a country’s own and regulated digital currency (Abdulkareem, 2021). In light of this, the CBN, through the professional services of Bitt Inc., developed a digital currency named e-Naira, which appears to be the first ever country-owned digital currency in Africa. According to Emeka (2021), the e-Naira platform, likewise the physical Naira, is a legal tender which must be accepted by merchants and business outlets as a form of payment in the country. The platform is established to accelerate financial inclusion, and function as an e-wallet with which users will store monetary values (Wale, 2021). In line with the aforementioned essentials of the e-Naira platform, it becomes vital to consider how this platform will be beneficial to small and medium scale businesses in Nigeria. Remarkably, the CBN noted that the e-Naira, as a digital currency, will remain useful for inter-party transactions as long as such parties accept the validity of the currency in use, hence, will enjoy the advantage of instant settlement (Emeka, 2021). Considering that transactions in this mode run without any physical exchange of funds, this platform will also save business owners as well as their customers from the risk of money theft, which is prevalent in Nigerian society. This study, therefore, is aimed at investigating the possible relevance and benefits of the e-Naira platform to SMEs in Nigeria.

Statement Of The Problems

SMEs play an unquestionable and substantial part in the economy of Nigeria. However, their survival, development, and success have been limited by a number of environmental constraints, such as a lack of basic infrastructure, erratic power supply, unfavorable economic policies, and theft and robbery (Basil, 2015). Much more, they have been faced with the challenge of receiving counterfeit Naira notes, struggles in the provision of customer balances after purchases, inability to manage business funds without sorting out personal needs from business revenue, inability to perform cross-border transactions due to difficulties in the use of banking services etc.(Adepoju 2013). These issues have been of major concern since they have led to the liquidation of countless SMEs in society. However, the e-Naira platform has been presented to facilitate multiple financial services which do not only profit individual users but also business entities, with the potential to manage some of the issues of SMEs as stated above.

As stipulated by CBN, “For businesses, e-Naira allows clients pay for services with such convenience that keeps them coming back. With e-Naira, businesses will grows beyond the boundaries of Nigeria because foreign transaction is not just possible but fast and inexpensive (Abdulkareem, 2021). Hence, e-Naira promotes efficient and transparent cross-border payments which foster beneficial foreign business partnerships. It opens up a whole new customer base. With the increased customer base, business growth is guaranteed (Wale, 2021). And many more. Therefore, this study is set to investigate the relevance of e-Naira to small and medium scale businesses in Nigeria.

Objectives Of The Study

The general objective of this study is to critically ascertain the relevance of e-Naira to small and medium scale businesses in Nigeria. The specific aims of the study include;

Research Questions

The following questions will guide this study.

1) What are the challenges faced by SMEs which the e-Naira platform can resolve?

2) Will the e-Naira platform facilitate a swift flow of financial exchange between SMEs and their customers?

3) Will e-Naira promote efficient and straightforward cross-border transactions for SMEs?

Significance Of The Study

The study will mostly be invaluable to SME owners and managers, as well as students and researchers.

To SME owners and managers, this study will educate them on the various challenges they do encounter in their daily business operations and how e-Naira will resolve them. More so, the study will enlighten them on whether or not the e-Naira platform facilitates a swift flow of financial exchange between SMEs and their customers. Also, whether or not e-Naira promotes efficient and straightforward cross-border transactions for SMEs.

To students and researchers, this study will serve as a source of information for them when conducting research on related topics.

Scope Of the study

This study examines the relevance of the e-Naira platform to SMEs in Nigeria. The study will further identify the challenges faced by SMEs which will be circumvented through the use of the e-Naira platform, investigate if the e-Naira platform will facilitate a swift flow of financial exchange between SMEs and their customers, and investigate if e-Naira promotes efficient and straightforward cross-border transactions for SMEs. In the light of the above, the respondents for this study will be obtained from selected e-commerce SMEs in Abuja, FCT, Nigeria.

Limitation Of The Study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. However, the researcher were able to manage these just to ensure the success of this study.

Definition Of Terms

SME: Small and medium scale enterprises

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.