Nigeria will make a giant thread on blockchain technology with the recent national blockchain policy. But the West African nation won’t be welcoming crypto anytime soon — blockchain policy or not.
On May 3, the Federal Ministry of Communications and Digital Economy announced the approval of a national blockchain policy. This means that the Nigerian government is supporting a technology that has the potential to boost the development of the Nigerian digital economy and make citizens safer on digital platforms.
The move is game-changing and reflects the government’s support for technology. However, several industry watchers are raising questions regarding implementation and asking a critical question: why is a pro-blockchain government still banning crypto?
Blockchain is an advanced technology that uses database mechanisms to record transactions in a decentralized public ledger.
Promoters of blockchain call it next-generation technology that can make all aspects of the human life process, from financial services and healthcare to supply chain and identity management, more accessible. ,
Gartner, a research firm, said blockchain will add $3 trillion in business value by 2030 — the pie the Nigerian government wants to plug the economy into.
Crypto is still not welcome.
Although the Nigerian government intends to approve a national blockchain policy, this means it will use cryptocurrency (which remains the most prominent use case for blockchain).
In July 2021, the CBN banned banks from processing cryptocurrency transactions and asked the banks to “close the accounts of persons or entities involved in cryptocurrency transactions.” The bank cited the financing of terrorism and money laundering as the main reasons for the action. It claimed that it was protecting Nigerians from the dangers of adopting crypto-cryptocurrency.
Meanwhile, the national draft blockchain policy showed that the Nigerian government remains against cryptocurrency as it seeks to develop regulations for other blockchain use cases. “
Blockchain technology has great potential in the Nigerian digital economy. The main focus has been on cryptocurrencies, particularly bitcoin. Although there is much more blockchain can do for the economy, and this strategy document aims to redirect focus to other areas,” the draft reads in part.
According to Christian Duffus, CEO and founder of blockchain startup Fonbnk, they explained to TechCabal that the blockchain policy could be a reactionary measure by the government to send out a clear signal that they are not completely against blockchain technologies, especially after the ban on cryptocurrency.
“The blockchain policy is a crucial move by the government to accommodate blockchain innovation in the country. After the crypto ban, they cannot afford to be seen as a government considering illegalities with blockchain operators. He also said that the policy also provides a framework for eNaira, the the blockchain powered digital currency issued by the CBN.
Oluwatobiloba Ajayi, a blockchain expert and founder of B2B crypto startup Ivory Pay, remains unfazed by the exclusion of crypto from the national blockchain policy. “Crypto-regular and foreign finance outside the government’s watch. And they don’t want that, so I’m not sure this policy will help crypto,” he said on a call with TechCabal.
How does blockchain policy help?
According to FMCDE, the main reason for the policy is to create a blockchain-enabled economy that provides secure transactions, data sharing and value exchange between people, businesses and governments.
The policy serves as a government-led approach to adopting blockchain technology in Nigeria. While the next steps in the implementation process remain ambiguous, the fact remains that through this policy, the Nigerian government is announcing itself as a partner for blockchain-related innovation in the country.
The CEO of OfficerseAfrica, Nnamdi Uba, the startup using blockchain to resolve property rights in Africa, spoke to TechCabal about the national blockchain policy. “I am one of the few who have worked on the political project for the past three years,” he said. “We want to unlock the power of blockchain in our national economy through a government-led approach. The goal is to embed the use of blockchain in government processes, and then roll it out to the masses.”
“However, we need to realize that blockchain does not start and end with crypto. For example, my real estate company is blockchain-powered, but we do not use crypto. Blockchain can help in many ways, including tokenizing properties, supply chain tracking and authentication of documents. We will also see a more interesting use of it in the future. If you know, the incoming administration has also promised to focus on blockchain technology,” he shared.
The policy’s strategic framework includes promoting blockchain business incentive programs and establishing a national blockchain sandbox for proof of concepts and pilot implementation. These initiatives show that the government wants friendly policies to make it easy for Blockchain startups to start.
In the past, we’ve seen government policies work against tech startups – as was the case in Lagos’ placement of a ride-hailing ban. This is one time we see the government issuing a policy that stimulates investors and developers in this sector. It’s a big deal, but for it to be effective, the government needs to be at the forefront. They need to implement the implementation effectively and integrate the technology into their systems, Ajayi said.
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