With its newest nationwide blockchain policy, Nigeria appears to be going massive on blockchain know-how. But the West African nation doesn’t appear to be welcoming crypto anytime quickly—blockchain policy or not.
On May third, the Federal Ministry of Communications and Digital Economy (FMCDE) introduced the approval of a nationwide blockchain policy. Essentially, because of this the authorities is throwing its weight behind an rising know-how which it hopes can “facilitate the development of the Nigerian digital economy and enable citizens to have more confidence in digital platforms.”
The transfer was lauded as game-changing and reflective of the authorities’s pro-technology place. However, a number of business watchers are elevating questions regarding implementation and asking a vital query: why is crypto nonetheless banned by a pro-blockchain authorities?
Blockchain is a complicated know-how that makes use of database mechanisms to document transactions in a decentralised public ledger. Advocates of blockchain describe it as a next-generation know-how that may be utilized to optimise each side of human life, starting from monetary companies and healthcare to produce chain and id administration. According to analysis agency Gartner, the enterprise worth added by blockchain will enhance to over $3 trillion by 2030—a pie the Nigerian authorities is now hoping to plug the financial system into.
Crypto remains to be not welcome
For the Nigerian authorities, approving a nationwide blockchain policy doesn’t quantity to accepting cryptocurrency (which stays the most distinguished use case of the blockchain). In July 2021, the CBN banned banks from facilitating crypto transactions and requested that banks “close accounts of persons or entities involved in cryptocurrency transactions.” The financial institution cited terrorism financing and cash laundering as its key causes for the motion, sustaining that it was defending Nigerians from the dangers of crypto adoption.
Meanwhile, the nationwide blockchain policy draft reveals that the Nigerian authorities remains to be crypto-averse because it seeks to develop a regulatory framework for different use instances of the blockchain. “Blockchain technology undoubtedly holds great potential for the development of Nigeria’s digital economy. A lot of the focus has been on cryptocurrencies, especially bitcoin. However there is a lot more that blockchain can do for the economy and this strategy document aims to redirect the focus to other areas,” the draft reads in half.
Christian Duffus, founder and CEO of blockchain startup Fonbnk, defined to TechCabal that the blockchain policy could also be a reactionary measure by the authorities to ship out a transparent sign that it isn’t broadly towards blockchain applied sciences, particularly after the publicity of its ban on crypto. “The blockchain policy is an important move by the government to accommodate blockchain innovation in the country. After the ban on crypto, they can’t afford to be seen as a government that associates illegality with blockchain operators. Interestingly, this policy also provides a framework for eNaira, the blockchain-powered digital currency released by the CBN,” he stated.
Oluwatobiloba Ajayi, blockchain skilled and founding father of B2B crypto startup Ivory Pay, stays unruffled by the exclusion of crypto from the nationwide blockchain policy. “Crypto significantly takes control and oversight of finances off the government’s watch. And they don’t want that, so I’m not sure this policy will help crypto,” he stated on a name with TechCabal.
How does the blockchain policy assist?
According to the FMCDE, the overarching objective of the policy is to create a blockchain-powered financial system that helps safe transactions, information sharing, and worth change between individuals, companies, and authorities. The policy virtually serves as a government-led method to the adoption of blockchain know-how in Nigeria. While the subsequent steps in the implementation course of stay unclear, the reality stays that via this policy, the Nigerian authorities is saying itself as a collaborator for blockchain-related innovation in the nation.
Nnamdi Uba, the CEO of HomeAfrica, a startup that leverages blockchain to unravel land title possession in Africa, spoke to TechCabal effusively about the nationwide blockchain policy. “I am one of the people that have been working on that policy project for the past three years,” he revealed. “We want to unlock the power of blockchain in our national economy through a government-led approach. The goal is to entrench the use of blockchain in government processes, then roll it out to the masses.”
“However, we must realise that blockchain does not start and end with crypto. My real estate company, for example, is blockchain-powered, yet we don’t use crypto. Blockchain can help in many ways, including the tokenisation of properties, supply chain tracking, and authentication of documents. We will also see more interesting use cases come up in the future. As you know, the incoming administration has also promised to focus on blockchain technology,” he shared.
Some initiatives outlined in the policy’s technique framework embrace the promotion of blockchain enterprise incentives programmes and the institution of a nationwide blockchain sandbox for proof of ideas and pilot implementation. These ambitions by the authorities convey a pleasant regulatory framework for blockchain startups in the nation.
“Historically, we have seen government policies work against tech startups—as the case was in Lagos’ ban on ride-hailing. This is one time we are seeing the government roll out a policy that incentivises builders and investors in this niche, It’s a big deal, but for it to work, the government must be at the forefront. They must drive its implementation and integrate the technology into their own systems,” Ajayi stated.
…. to be continued
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