The Central Bank of Nigeria (CBN) has finalized a Memorandum of Understanding (MoU) with Gluwa Nigeria as a partner agent to help drive increased adoption of the eNaira central bank digital currency (CBDC).
The partnership’s core objective is to harness the power of blockchain technology to:
- Enhance financial inclusion
- Improve eNaira functionality, and
- Foster financial innovation
Gluwa, a blockchain-based financial platform that has been operational in Nigeria for several years, will integrate its Credal technology into the eNaira platform. The intention is to facilitate the establishment of ‘credit reputations’ for eNaira users, thereby advancing financial inclusion.
These credit profiles will be ‘accessible across borders,’ enhancing the effectiveness of the CBDC.
“Gluwa sets its high ambitions of onboarding millions of Nigerians by implementing its Credal technology to build credit reputations for eNaira users as a valuable new way to drive the adoption of the CBDC,” the company’s press release reads.
Additionally, the partnership between Gluwa and the CBN will focus on:
- Simplifying Fintech Lending – Enabling fintech lenders to expedite the loan origination process by facilitating direct eNaira transfers to customers, thereby enhancing the speed and efficiency of services provided
- Authenticating Transactions – Establishing the eNaira as the definitive record for all loan transactions conducted by fintech partners, ensuring accuracy and transparency in financial operations and credit scoring
- User Authentication – Implementing a robust authentication mechanism utilizing asymmetric encryption with private/public keys, to offer users a secure, private, and regulatory-compliant way of accessing financial services
Why Credal is Significant
According to Gluwa, their goal was to tackle a significant challenge: credit-related data being exclusively confined within traditional banking systems, leaving the unbanked with no means to establish credit profiles.
“Adding to this limitation, existing credit profiles are inherently domestic and lack accessibility beyond a country’s borders. Recognizing the critical role a credit profile plays in fostering financial independence, we believe that its scope should extend beyond national boundaries,” Credal said.
Credal unlocked these boundaries with the establishment of a public blockchain that easily integrated with the processes of fintech lenders, in which the RWA-focused network has recorded over 4.27 million loan transactions valued at $80 million (USD) and has serviced over 337,000 users.
In addition, Gluwa aims to leverage its newfound role as a partner agent of Nigeria’s central bank to promote adoption. The company plans to collaborate with lenders and fintech partners to streamline direct eNaira transfers to customers and establish the eNaira as the authoritative record for loans, further solidifying its position within the financial ecosystem.
The announcement follows nearly eight months after Nigeria’s central bank declared its intention to improve the existing eNaira model to ‘enhance the volume and activity of wallet holders.’
CBDCs | Central Bank of Nigeria 🇳🇬 Looking to Make eNaira Amendments to Boost Adoption and Wallet Activity
The volume and value of transactions involving the CBDC have been relatively constrained. While the eNaira experienced a recent surge in usage due to cash shortages, the… pic.twitter.com/adrsSWACSU
— BitKE (@BitcoinKE) August 1, 2023
In recent weeks, Nigeria has garnered attention primarily for its public dispute with Binance. The government has reportedly imposed a $10 billion fine on the company and detained two executives over allegations that Binance, operating without authorization in the country, manipulated foreign exchange rates for the Naira.
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