We're delighted today to be joined by Adedeji

Owonibi who is here today to talk about

some of the developments in the african and

specifically nigerian CBDC and stablecoin space.

So we'll be hearing more about the eNaira,

about the african Stablecoin consortium, and about potential benefits

and challenges to adoption of new forms of digital

money in Nigeria and the west african context.

Deji, it's great to have you here with us today.

Thank you so much for joining us, especially while

you're travelling and please give us an introduction to

yourself, your background and what you do.

Thank you Jannah, and thank you for having me.

My name is Adedeji like you mentioned.

And most people call me Deji simply

because of the length of the name.

So probably they just want to cut it down.

So Deji is good.

I am Co-Founder and also CEO at Convexity.

Convexity happens to be.

The company is a blockchain company.

Of course we established the first blockchain innovation hub

or maybe innovation lab in Nigeria and where we

create a space where people create Web3 solutions and

build blockchain-enabled solutions and also the answer to

local problems that we believe that the transparency of

blockchain and its security can actually bring some decent

value to it.

And of course we have a small venture studio where

we invest in groundbreaking solutions that we see from the

hub and to give them just a seed fund that

we make sure they are able to do their minimal

viable product to get into market and we support a

lot of them all the way up till this moment.

We're involved with also policy discussions, regulatory discussions around anything

around digital assets.

Now we're involved with of course regulation and to also

see how we can guide with our little bit of

expertise to see how we can channel that.

So we involved pretty much with Nigerian

blockchain policy drafting which was launched by

the immediate past administration to show the

roadmap of what the country want to

harness from the potentials of blockchain itself.

Of course we're also very much involved with SEC

regulation and of course we are part of the

committee that was set up by Nigeria to draft

a regulatory framework for digital asset in the country.

And that was recently also passed as a guideline

to give a basis for virtual asset services providers,

registration, custodial and exchange owners and the likes.

Very quite recently, just like I told you earlier,

we view solutions to answer to local problem.

So we've been working on Naira pegged or

Naira backed stablecoin called the cNGN for about

two years now, and we're doing that quietly.

And we're also working hand in hand regulators

to give us the most needed guides on

how that can be rolled out.

So we've been working with them.

It's not yet out.

I think we are approaching the

final lap, working with regulators.

We just pray we get the final nod to get that out.

But again, it started up as an initiative of Convexity.

And so it started as Convexity NGN,

which is the 'c' in the cNGN.

But with the interaction and of course, engagement

with regulators, we had an impute that should

make it a consortium driven stablecoin as against

just driven by one company.

And to all that suggestion made a lot of sense.

And so we started reaching out to some few commercial banks

to see if they can be part of the initiative.

And we are very glad that we got

a few commercial banks, a few fintechs, and

of course, a few blockchain companies to join

that consortium to power the Naira-backed stablecoin.

We also brought in the cryptocurrency exchanges and

the ecosystem to be part of the consortium.

So just to be able to give you the

adoption that is needed to power that economy.

So that is the summary of where we are.

That initiative gave birth to what we call

today African Stablecoin consortium, which is now a

consortium, as again, just a consortium in Nigeria,

is a consortium of african stablecoin issuers.

And so what we intend to see is

that african stablecoin issuers in different african countries

are also part of the african stablecoin consortium.

That will be, if you may, just the think tank.

And also giving policy direction and regulation for how

an advisory within the board of the African Stablecoin

consortium, how we think the absolute stablecoin that should

work for Africa should look like.

That is absolutely fascinating.

And I know I wanted to ask you about the

CBDC side of the eNaira, but since we're already down

the path of the CNGN, maybe we can carry on

talking about that for a little while.

So what's your vision for

a nigerian national stablecoin?

What benefits do you think that it

can bring to the nigerian economy, to

the financial services and fintech ecosystem, and

to the implementation of Nigeria's digital strategy?

So for us that time, what our vision was was

to also help the government, because, again, we are very

strong believers in the digital economy, and we're very proud

that our government took the first step.

While countries around the world are not sure what

step to take, Nigeria took the bold step to

say step in and do a CBDC when the

whole world are thinking about what to do.

A lot of central banks, bank of

international settle ment, everyone is cracking his head

on what it should be like.

Who took the first step to actually

step into the waters and learn.

And so for me that is a very audacious move.

And that is for me a very positive move.

And of course a very strong signal to the remaining

african countries that this is possible even to the whole

world, of course, which is a very massive launch that

we did in that very aggressive manner.

And of course, with all projects, if you're taking

the first step, be ready also to take the

first mistakes that you could fall in those pitfalls.

And against whatever happens in Nigeria is

shaping the CBDC approach across the world.

And so that is why I say taking

the first step is a very big bold

initiative that the government did that time.

And I think it's great that that is happening.

Of course, if there are other t's that need to

be crossed that was not, and other I's that need

to be dotted that are not and out of that

lesson, and I think that is being picked up.

So why we did the stablecoin was in

response to that issuance of the CBDC.

So the idea is great.

The idea of CBDC is fantastic.

But we saw a little bit of limitation to that CBDC

not also entering into the realm of the public blockchain.

Because again, it's still normal, privately owned,

privately controlled environment by the Reserve bank,

by the central banks around the world.

And therefore there's actually, sorry to interrupt you.

Is eNaira actually blockchain-based?

Absolutely, but it's a private permission

Hyperledger blockchain that was used.

So for us it's great.

It's a real live use case on the blockchain.

And of course it's powered on the Hyperledger fabric.

And so we just saw that interoperability

issue again, because I cannot use my

eNaira, for example, on Ethereum network.

I cannot use it on bitcoin network.

Can I use it on binance smart chain?

And that is where a lot of web3 activities happen.

So we come in, which is of course

it's not the responsibility of the central banks.

It can be the responsibility of businesses

like ours to bridge that gap.

And that's why we came in to have a

wrapped version of the eNaira that will be able

to be transported to these public chains.

If you need where, yes, you're operating on this different

chain, but you're using the eNaira also to give it

that faster lane to be able to be present in

the public blockchain where of course you understand Nigeria is

one of the very popular countries and one of the

top in Africa and top in the world that is

actually embracing the adoption of digital currencies, crypto assets

and therefore we think this will be a great

opportunity for the central bank digital currency to be

used on those chains, albeit in the wrapped version

that we're giving it, the cNGN.

And that was the beginning of the cNGN journey.

But what we did was to have both channels built out.

So both the wrapped version that mimics the CBDC which is

the eNaira and also building out the fiat side that just

may make the normal paper Naira depending on how we see

the adoption go as a business go the twofolds.

And so that is what engendered that development.

That's really interesting.

And going back to the eNaira a little

bit, can you tell us a little bit

more about some of those early drivers for.

Because I think the eNaira was the second retail CBDC

that went live in the world after the sand dollar.

And so what were some of the drivers for

the nigerian government to introduce the CBDC at such

an early stage and what was the kind of

implementation process that they followed for it?

So like I said earlier, Nigerians are

early adopters to digital asset ecosystems.

So young Nigerians are passionate about it.

They use it for their daily transactions.

And it's just simple to say

okay, how do central banks play?

And the discussion on the table at

that time is central bank digital currency.

That is where you can just be able to enter into

the realm and also offer the same kind of fast cheaper

transactions speeds and all those issues at the same spot.

And so that is I think what

motivated for seeing Nigeria on the chart.

I've been number one here, number two here and all

those issues then it's just responsible of the central bank

to do something to bring this payment system to that

level where two, four, seven, you can operate it.

And of course it's cheaper for you to transact and

also looking at financial inclusion for people that are hard to

reach to see how that can actually happen.

So I guess that was the

motivation that they stepped in earlier.

And again, like I told you

that central bank are innovative innovators.

Just want to take and test and see

how it happens when innovations are springing out.

And as a matter of fact aswell give back

to Convexity for example if you know for people that

in finance of course Convexity measures the sensitivity of the

prices, interest rate and the price of bond.

So that sensitivity is what we saw in

blockchain that want to say, okay, we're sensitive

to this technology, I want to just take

advantage of whatever it has to offer.

And so for us, we see that alignment with our

own central bank trying to be sensitive to that technology

and also sensitive that the young people are moving to

a new technology and they should be there as a

proactive and innovative central bank, my view, okay.

And the road to adoption for the

eNaira has not been a smooth one.

Can you talk us through some of the challenges to

adoption that have been experienced and maybe why those exist

and how you think they can be overcome.

So like you said, of course with

any new technology, most people are learning.

So there will be a turbulent start.

And the same thing is as it is with everything in life.

If you're taking off in the flight, everyone is bothered

until its balances are stabilised in the air, over 33

metres over the sea level, then everybody relaxes.

Right?

So those, early years, the whole CBDC project is starting.

Of course they don't see how

it is received in the market.

And I think there's a

fantastic thing that was happening.

I think there's a misconception in my view where

people are thinking, oh, it's not a success, but

meanwhile they're building a lot of use cases on

top of that that are not reported.

So for example, it has a deeper retail penetration.

And I think people telling the stories are

possibly not in Nigeria and possibly not from

the central bank because again, a lot of

things are happening within the retail.

So that is the first CBDC that has checked on

how you can put the CBDC on cards, for example,

how you can put the CBDC token on wearables, for

example, which I have seen it playing out.

Of course, they are the first CBDC that has

also gone on point of sales terminals that

you can actually check out and do this.

And so beyond the understanding of CBDC in different wallets,

the nigerian central bank have gone deeper with multiple use

cases, really where you can just get that to places

where they don't have any banking or you have it

available wearables where they can have in their hands, they

can have it as a watch and they can use

that to transact across multiple channels.

And so that is also there.

People use it to buy airtime.

So a lot of use cases have

been built that are not reported.

And so that takes a lot of time with a

lot of people exemplifying what they can do with it,

how farmers can, how they can use that.

They've built another layer that can enable farm impute

traceability with this and I think it's not reported.

They've built a lot of use cases

that can reach the poor and vulnerable

people with a humanitarian need.

And so a lot is happening on the sidelines

and I think maybe news people just

believe negative reportage makes more sense.

But there are a lot of

positive things that are happening.

And I think if there's any lesson that I think

I'm not within the central bank, but from my own

observation from outside, is that possibly the retail channel that

the central bank started with, which of course central bank

now is playing a bigger role of playing like a

retail, directly to the retail customers.

That lesson has been learned and I can tell you that

the eNaira service is moving to what we call the eNaira 2.0,

where it's now domicile within the bank as a wholesale, where

they can now do the direct on/off ramping to their customers

and serve them the way they should.

And so I anticipate to see that eNaira have learned

those lessons and are going to be the most adopted

and mostly used CBDC across the globe, in my view.

That's a really interesting insight into what's happening

with eNaira, because you're right, we don't

really hear the positive news.

It's mostly, oh, it hasn't been adopted.

But I think what I'm taking away from what you said

is, and it's a point that's been made here as well,

the point is, maybe a retail CBDC shouldn't be judged in

its success by the extent to which it displaces day to

day payments, but rather in the role that it plays as

a platform for innovation and what that means for the future

and for things that we can't necessarily do today.

And as Sir Jon Cunliffe at the Bank of

England has said in some of his speeches, it's

a bit like the iPhone. When the iPhone was

introduced, no one could foresee that we would all

have neck strain paraphrasing him heavily because it would

be so ubiquitous in our daily lives and it

would be replacing all this different functionality.

And in the same way a CBDC can

be viewed as a piece of national infrastructure

that is a platform for innovation.

And I think from what you're saying, the eNaira seems

to be succeeding more on that basis than as a

day to day payment system, which there are already many.

But this is something new and something that is

capable of giving rise to new and interesting things.

Absolutely.

So for example a lot of fintechs that I'm aware of.

So again there was a hackathon where you can be given

access to the APIs to play with it and do what

you think you want to see a CBDC do in your business.

So we see use cases where you

use that to pay for flights.

You see cases where people use it

to do a lot of loyalty cards.

You see a lot of use cases where people just

use it to recharge their phones, to pay for utilities.

Many fintech businesses were building across that and of

course the central bank made that platform open for

them to have direct APIs with just a simple

application to be part of the partner within the

eNaira platform and you're giving that access to just

innovate on that national platform like you mentioned.

And so for me those are the areas that I say I

think Nigerian CBDC deserve a deeper study by a lot of CBDC.

So I think one thing I noticed, the central bank

is very conservative so they don't push these narratives out.

But,

a lot of things are happening.

People are building on top of that infrastructure.

A lot of refinement is happening on top

of that infrastructure as people use that API

and they of course give constructive criticism back to

the central bank, which it picks up with all

humility to see that they're building that platform for

businesses, for fintechs, for other people to have it

as a national infrastructure to create innovation.

And I think that is a

complete success is happening already.

Of course, our company is one of those platform on

top of that, trying to innovate and build across that.

And we're doing that with

humanitarian solutions that we're building.

We're doing that with automatic ticket refunds

on the airline that have cancelled.

So a lot of businesses are building

different solutions on top of that.

So going to the eNaira 2.0, which will be championed

by the bank, which if you may, you can call it

the wholesale CBDC, that will be driven by the banks.

With the 2.0, we now engender a massive adoption

that a lot of people want to see.

So I think there's a need to research

more about the eNaira and I hope they

want to speak to people what they're doing. Really.

I think, yes, I'd like to find out a lot more about it.

So what are the key differences?

Is the key difference between the

eNaira and the eNaira 2.0

the fact that the eNaira is retail

and 2.0 is wholesale? Or made available

for wholesale applications? It's going to be

completely wholesale driven by the bank and the banks

and fintechs are going to be taking ownership.

So from building solutions to tokenized bank deposits

to payment system, from the fintechs, a lot

of things I would just anticipate.

Watch out for Nigeria.

Okay, so in the future we're going to

have both wholesale and retail versions of an

eNaira and that's on the CDDC side.

And then we're also going to hopefully be

seeing the introduction of a nigerian national stablecoin

as well from the African Stablecoin consortium.

And how do you see these

two interacting with each other?

How will they coexist?

And kind of what will the different

use cases for both of them be?

Just to correct the retail is going to cease to exist.

Of course, the retail regime is ending as we go to 2.0.

So it's going to be wholesale driven by the bank.

So banks will basically be distributors. Banks will own it.

Banks will be the one doing it.

Banks will be the one.

I don't have that detail.

But I think that's the feel that was getting.

So for us, again, our design remains the way it is.

They will operate the same way we

think we've been planning it before.

Of course we're still going to be having

the wrapped version of it on the blockchain.

And while we wait, if it's going to take longer,

of course the Naira actual cNGN will still be running.

Of course, that's why we're looking to get the

nods and necessary approvals to do a PoC to

show the viability and the reasons why we think

that it's very important in our economy to the

central bank and all regulators to hopefully we get

there nod to make sure that road into the

market, but that is not stopping also the think tank

and the discussions at the african stablecoin consortium level.

Of course, our firm, we're members, the fintechs are

members of the African Stablecoin Consortium and all the

firms that come together to form the nigerian stablecoin

are all part of the african stablecoin consortium.

Just, I think two days ago.

Of course, the idea also is here and

very well with digital shilling in Kenyan Shilling.

And so we are also having the

consortium driven Kenyan Shilling and driven by

the blockchain community in Kenya.

And of course, when that is concluded,

they're also joining the African Stablecoin consortium.

So all african stablecoin consortium that is going to

be driven within that will be part of national

stablecoins within different countries are going to be members

of the African Stablecoin consortium where we advise individual

government on what the policies and regulations should be,

in our view, and also bringing our use cases

around the world and also contribute to other stablecoin

papers around the world.

So currently we're contributing to.

We're going to put our own

contribution to the digital Pound.

And we discussed it yesterday with the policy lead

and also that of Hong Kong and what we

saw, because we discovered they're saying they're only going

to be recognising stablecoin from G10.

And that for us at the african

stablecoin consortium, we see a complete exclusion

of what the whole african economy is.

And so we're making that contribution on our platform

and straight to the Hong Kong regulatory body.

That's great.

And I think, yes, there's probably some

valid points and there's some interesting perspectives

you can bring to the stablecoin regimes

that are emerging around the world.

I think for the stablecoin geeks in our

audience, can you tell us a little bit

more about how the cNGN will be structured.

So what sort of backing assets,

where will backing assets be held?

What's the process for creation and redemption and

the kind of market structure around issuers versus

service providers and distributors and things like that.

Yeah.

So we envision a single currency backed stablecoin.

Again, we don't want to bring in

a lot of complexity into it.

And a lot of people ask me, okay,

what are you going to do with volatility?

And of course, stablecoins are

not meant to check volatility.

They're just meant to mirror national currencies.

For our own use case, we

are packing it with full Naira.

And of course, for every single cNGN that

will be out there in circulation is backed

by Naira sitting within the Reserve Banks that

are part of the consortium members.

Of course the idea is to give that

governance and keep it within their bank.

And of course they are highly supervised, highly

regulated banks, of course very reputable banks.

And so this is going to be there.

We will be onboarding registered and licensed merchants

and registered and licensed exchanges that will be

coming to actually mint from our platform.

And so of course it's automatic for those that have

been vetted by going through the proper KYC and of

course all the necessary KYC, AML, CFT, also PEP screening

and all the necessary global screening to make sure that

they are actually supposed to be served by us.

And so we take regulation, of

course, if you understand our background

about risk, about regulation, about compliance.

Again, fortunately, we are also having members

that have contributed to the formulation of

travel standard within our own place.

And so we're taking regulations seriously.

And that is why for the past two

years, we refuse to come to the public.

And we're working with regulators, we want to cross the

t's, we want to dot the i's with them.

We want to answer their questions from

different department risk management department, payment systems,

mention them to make sure that is

actually done very properly.

So those are the people that can come to our

platform and they are not going to be so many.

And so we can put our eyes on them to

actually quickly spot any abnormality and if that may arise.

So of course we'll be having a lot of them that

will be able to uptake and also serve their retail customers.

So if you have any exchange that

is licenced will come to mint.

And of course we have minimal threshold of how much

can come to our platform so they can serve the

retail customers properly and they can also build some other

use cases with them and have partnership with different fintechs

and bank and see how that is solved.

We see a lot of use cases that will come out of that.

Of course, payment will be that.

And of course, the faster and fluid payment and

cheaper payment systems within our rails will be that.

And again, that would take the Nigerian Naira

on the same scale and power where we

see the likes of USDT, USDC flying.

So if you may, what we are seeing is

the Naira is currently at this level and maybe

you have USDC playing at a different realm, right?

So we are not on the same realm until we

do the cNGN to go there on that realm of

the blockchain to be able to interoperate between themselves.

And so therefore, possibly we see a lot of injection

of foreign currencies into the country, for example, which will

be now seamless and a lot of investment that we're

seeing for people that want to actually uptake.

And we're seeing a lot of

positive vibes even by the Mare.

Few feelers that went into public albeit was a

leak from our own group, was not officially released.

It was a leak.

And it's okay.

It help us test the market to see exactly that

people are absolutely anticipating a stablecoin.

And so for us, it will also be able

to kill, if you may, regulate the high reliance

on P2P marketplace in Nigeria today.

As it stands statistically over the last few months,

I think generalised report shows June to July.

Last year we did over $60 billion.

And that we are not comfortable that the regulators

within our country cannot tell you exactly where those

monies have gone to or what they are, and

they are not able to also tax them.

And for in our own view, this should not be so.

Therefore, if we have something like this, because

first the central bank have asked the banks

not to actually interact with digital asset service

providers, we're glad that that was reversed.

And so now if they can actually interact

and open account for virtual asset service providers,

then of course with stablecoin, we're also convenating

to give full visibility to the central bank.

And we're doing that very clearly.

We are very ahead.

And I believe, I don't know if you are aware

with project from the Bank for International Settlements that they

want to do a PoC with the Bank of England

called Project Pixia, where you have a direct visibility for

regulators to have direct reporting to regulators.

That POC document, our team have picked it up.

We built out that regulatory framework on our own.

We did not apply for the POC

to apply for BIS to do that.

We are doing that on our own, for our own regulators

to make sure to show that genuineness and openness, to make

sure that that is what we want to see.

So we build that platform to give the regulatory dashboard directly

to the central bank to be able to see how much

has been minted, which bank is holding what, who are the

opticals that I told you about and what are the kind

of KYC that have been done on them.

Where is this money circulating at this point?

And this is real time without even

waiting for any attestation report from us.

And for us, this is great. This is how I want to show

the example of how stablecoins should operate.

And you can attest to that, that no

single stablecoin today that exists in the world

does that with that particular one.

Even the Bank For International Settlements says you may want

to do a POC to test that out.

But of course, we start with all the

engineers we say we are doing that.

We're not building it for BIS.

It's something they want to see.

I want that to be seen here and we'll

continue to improve it as things move on. Really.

Jannah. Thanks so much.

Deji, I could go on asking you questions easily

for another hour at least on backing assets.

And I think some of the really interesting

applications potentially of how the eNaira and the

cNGN can sit alongside each other.

And I think your description has given me more

of a good sense of where the cNGN has

capabilities of the eNaira does not, for example, the

ability to operate on multiple blockchains, for example, and

therefore to power different use cases across the private

sector or in DeFi and things like that.

But I'm going to have to wrap it up for the day.

It would be lovely to keep in touch and to hear

more about what you're doing in the future and we hope

to bring you back to the DPF at some point.

Thank you so much for joining

us and for this fascinating conversation.

Thank you, Jannah. Appreciate.