The Central Bank of Nigeria (CBN) has revealed that it will be working with Bitt Inc. as the technical partner to launch Nigeria’s eCurrency – eNaira. The CBN’s Governor Godwin Emefiele disclosed this last Monday in Abuja.
According to the CBN, ‘in choosing Bitt Inc, the CBN will rely on the company’s tested and proven digital currency experience, which is already in circulation in several Eastern Caribbean Countries; Bitt Inc. was key to the development and successful launch of the central bank digital currencies (CBDC) pilot of the Eastern Caribbean Central Bank in April 2021’.
Bitt Inc. is a Barbados-based fintech company that leverages blockchain and distributed ledger technology to enable safe peer-to-peer transactions with seamless mobile money across Bitt’s software and mobile apps with payment systems that promote social inclusion, financial empowerment and economic growth.
While the nation’s apex bank has clearly stated that their selection of a technical partner was hinged on the company’s tested and proven experience in dealing with CBDC, some Nigerians have argued that the project would have been assigned to a local startup to ensure the ecosystem and nation’s economy thrives.
Was Executive Order No. 5 Breached?
In February 2018, President Muhammadu Buhari signed the Executive Order No. 5 (EO5) for planning and execution of projects, promotion of Nigerian content in Science, Engineering and Technology this proclamation directed all Ministries, Departments and Agencies (MDAs) to engage local professionals in the planning, design and execution of national security projects as well as maximize in-country capacity and talents in all contracts and transaction that has to do with science, engineering and technology.
President Buhari said the executive order's strategic intent is to harness domestic talents and develop indigenous capacities in science and technology to promote national competitiveness and productivity across all sectors of the economy.
However, the E05 directed that foreign companies and firms with demonstrated and verifiable plans for indigenous capacity development can be awarded contracts when local professionals are lacking expertise – in terms of qualification, competence and experience of management in the execution of similar contracts.
Could It be that local professionals are lacking expertise?
Some commentators alleged that competent Nigerian companies that could have taken up the job declined...; the name of the company and whether the allegation is true is unconfirmed at the moment.
However, we can deduce one of two things - either the CBN is saying that there are no competent Nigerian firms to handle the project, or working with the government has become so much of a cesspit that corporations would rather forgo the opportunity to do so.
Per an interview with Techpoint, the Vice Chairman Blockchain Industry Coordinating Committee of Nigeria, Chimezie Chuta disclosed that local technical partners might not be the best option given that the Blockchain network — Hyperledger Fabric — the CBN chose to run the eNaira is created by a consortium of “big entities including IBM and a couple of other big organizations that are not local.” Nevertheless, Chuta affirmed that there are local companies that can help launch the eNaira.
CBN to Own Stake In Bitt Inc.
One of the objectives of the CBN is to enable the eNaira to be the backbone for several digital-enabled financial transactions in Nigeria such as enabling payment by utility companies, helping the government collect taxes and facilitating e-commerce.
In an exclusive report Nairametrics stated that Bitt Inc will register in Nigeria as a Limited Liability company thereby allowing the central bank to own shares in its Nigerian entity - this intends for a mutual benefit to both the economy of the country and company.
Meanwhile, Osita Nwanisobi, CBN's Director of Corporate Communications said that with the significant explosion in the use of digital payments and the rise in the digital economy, the CBN’s decision follows an unmistakable global trend in which over 85 % of Central Banks are now considering adopting digital currencies in their countries.
Who is Bitt Inc.?
Globally, 81 countries including Nigeria are considering a Central Bank Digital Currency (CBDC), out of these countries, five have launched their digital currency, out of which Bitt Inc. is said to have built four of them. They also created the first CBDC hub.
The company was initially built to enable digital financial infrastructure in the Caribbean. In 2018, Gabriel Abed, a Co-Founder at Bitt was appointed as the special technology advisor to David Burt, the premier of Bermuda.
Abed has led presentations and engaged in discussions with the International Monetary Fund, the World Bank, the United Nations, the Commonwealth Secretariat.
According to Nwanisobi, 'the CBN’s selection of Bitt Inc, from among highly competitive bidders, was hinged on the company’s technological competence, efficiency, platform security, interoperability, and implementation experience'
Amidst the uproar on the choice of CBN's technical partner, it is obvious that the Executive Order No 5 was not violated going by the submissions made by the Vice Chairman, Blockchain Industry Coordinating Committee of Nigeria, Chimezie Chuta.
While we continue to closely observe the development as it unfolds, what can key actors in the ecosystem learn from this incidence?