The Impact of E-Naira in Tracking Money Laundering and Fraud in Nigeria
Chapter One
Objective of the study
The broad focus of this study is to examine the impact of e-Naira on tracking money laundering and fraud in Nigeria. Specifically the study seeks to:
- Examine the perception of users on the security of their e-wallet.
- Determine if the introduction of e-Naira will increase money fraud rate in Nigeria.
- Ascertain if the invention of e-Naira will heighten hacking of online transaction.
- Investigate if the e-Naira platform has the capacity to track money laundering in Nigeria
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Ozili (2019) states that blockchain is a ledger that record transactions involving digital currencies including cryptocurrencies and central bank digital currency. Bordo and Levin (2017) show that CBDCs are useful for transparent conduct of monetary policy. They show that CBDC can serve as a costless medium of exchange, secure store of value, and stable unit of account. Engert and Fung (2017) argue that the relevance of CBDC in facilitating retail payments depends on the specific attributes of the CBDC such as whether the CBDC bears interest or is non-interest bearing. Barontini and Holden (2019), in a survey of studies on CBDC, observe that many Central Banks are progressing from conceptual work into experimentation, proofs-of-concept, and are in cooperation with other Central Banks. Only few Central Banks are proceeding to the pilot stage with CBDCs, and even fewer Central Banks see the issuance of a CBDC as a short or medium term goal. Ozili (2021a), in a survey of CBDC adoption in Africa, show that over 70 per cent of African countries do not show any interest in adopting a central bank digital currency, while on three African countries have a robust payments infrastructure to support a CBDC. Grym et al (2017) show that CBDC will not only enable the general public to hold CBDC, it will also have significant implications for other areas of central bank policy. Andolfatto (2021) investigates the impact of CBDC on banks, and find that interest-bearing CBDC will increase financial inclusion, diminish the demand for cash and expand the depositor base of banks if the added competition compels banks to raise their deposit rates. Davoodalhosseini (2021) investigates the optimal monetary policy when only cash, only CBDC, or both cash and CBDC are available to agents in Canada. He finds that a more efficient allocation can be implemented by using CBDC than with cash if the cost of using CBDC is not too high. Also, the welfare gains of introducing CBDC are estimated at 0.64% for Canada. Wadsworth (2018) finds that the pros and cons of a Central Bank issued digital currency are mixed across each of the different Central Bank functions. Ozili (2021b) describes how the creation of a central bank digital currency can lead to the collapse of digital currencies including cryptocurrencies and bitcoins. Ozili show that Central Banks will leverage on their monetary powers and the trust that citizens have in government-backed money. This will give central banks strong incentives to issue a central bank digital currency. He further stressed that the issuance of a central bank digital currency can erode trust in cryptocurrencies, and can lead to the collapse of cryptocurrencies although not immediately. Náñez Alonso et al (2021) analyse CBDC status in countries like the Bahamas, China and Uruguay. They find that these countries are at different stages of CBDC development. Bjerg (2017) argues that a monetary system that has two competing money creators – the central bank and the commercial banking sector – can simultaneously only pursue two out of the following three policy objectives: (i) free convertibility between CBDC and bank money, (ii) parity between CBDC and bank money, and (iii) central bank monetary sovereignty. Ward and Rochemont (2019) show that many central banks have a negative view on cryptocurrencies and they promote CBDCs even though the international community has divided opinions on the potential benefits of CBDC itself.
Features of the Nigerian central bank digital currency – the eNaira
Design of the Nigerian central bank digital currency, the eNaira
Below are some of the design features of the eNaira at inception. The eNaira is designed to be the same Naira with more possibilities
The eNaira platform can be found at: https://enaira.gov.ng/
Nigeria operates a two-tier retail CBDC model.
The eNaira is designed to enhance the structure of participating financial institutions instead of replacing them.
The Nigerian CBDC model retains financial institutions as intermediaries between the Central Bank and customers.
The eNaira is designed to be a legal tender in Nigeria.
The eNaira is designed to have a non-interest-bearing status.
The eNaira is designed to have a transaction limit for customers.
The eNaira is designed to have a value-based transaction limit.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the impact of enaira in tracking money laundering and fraud in Nigeria.CBN forms the population of the study.
SAMPLE SIZE DETERMINATION
A study sample is simply a systematic selected part of a population that infers its result on the population. In essence, it is that part of a whole that represents the whole and its members share characteristics in like similitude (Udoyen, 2019). In this study, the researcher adopted the convenient sampling method to determine the sample size.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the Impact of Enaira in Tracking Money Laundering and Fraud in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of Enaira in Tracking Money Laundering and Fraud in Nigeria
Summary
This study was on the Impact of Enaira in Tracking Money Laundering and Fraud in Nigeria.Three objectives were raised which included; Examine the perception of users on the security of their e-wallet, determine if the introduction of e-Naira will increase money fraud rate in Nigeria, Ascertain if the invention of e-Naira will heighten hacking of online transaction and Investigate if the e-Naira platform has the capacity to track money laundering in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn CBN. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Digital currency is a disruptive technological initiative with the ability to revolutionize the financial sector and commerce. The Nigerian government and the apex bank (the CBN) are tapping into the huge opportunities in delivering efficient financial services to the populace through the introduction of eNaira. However, the success of eNaira lies on CBN, FinTechs, and financial sectors to do the basics and carry the populace along in confronting their challenges. The challenges mentioned above can hinder the potential of eNaira to thrive after its implementation in October 2021 and as we advance. This paper analyzed the digital or electronic currency, eNaira, and the opportunities and challenges in the implementation of eNaira. However, in the future, more studies are necessary after the October 2021 eNaira implementation.
Recommendation
The Nigerian government, through its CBN, should build among the populace to believe in the idea.
The success of digital-initiated currency in Nigeria should be driven by an agent different from the conventional CBN banking formation (Abraham, 2021).
The success of eNaira lies in the elimination of the challenges mentioned above and other emerging ones.
REFERENCES
- Andolfatto, D. (2021). Assessing the impact of central bank digital currency on private banks. The Economic Journal, 131(634), 525-540.
- Barontini, C., & Holden, H. (2019). Proceeding with caution-a survey on central bank digital currency. Proceeding with Caution-A Survey on Central Bank Digital Currency (January 8, 2019). BIS Paper, (101).
- Bjerg, O. (2017). Designing new money-the policy trilemma of central bank digital currency. CBS Working Paper, June.
- Bordo, M. D., & Levin, A. T. (2017). Central bank digital currency and the future of monetary policy (No. w23711). National Bureau of Economic Research.
- Davoodalhosseini, S. M. (2021). Central bank digital currency and monetary policy. Journal of Economic Dynamics and Control, 104150.
- Engert, W., & Fung, B. S. C. (2017). Central bank digital currency: Motivations and implications (No. 2017-16). Bank of Canada Staff Discussion Paper.
- Grym, A., Heikkinen, P., Kauko, K., & Takala, K. (2017). Central bank digital currency. Bank of Finland BoF Economics Review, No 5.
- Náñez Alonso, S. L., Jorge-Vazquez, J., & Reier Forradellas, R. F. (2021). Central Banks Digital Currency: Detection of Optimal Countries for the Implementation of a CBDC and the Implication for Payment Industry Open Innovation. Journal of Open Innovation: Technology, Market, and Complexity, 7(1), 72.