Nigeria’s blockchain policy: all growth, no crypto

With its latest national blockchain policy, Nigeria seems to be going big on blockchain technology. But the West African nation doesn’t seem to be welcoming crypto anytime soon — blockchain politics or not.

3 May, the Federal Ministry of Communications and Digital Economy (FMCDE) announced approval of a national blockchain policy. Essentially, this means the government is emphasizing an emerging technology that it hopes can “facilitate the development of the Nigerian digital economy and enable citizens to have more confidence in digital platforms.”

The move was hailed as game-changing and reflects the government’s pro-technology stance. However, several industry watchers are raising questions regarding implementation and asking a critical question: why is crypto still banned by a pro-blockchain government?

Blockchain is an advanced technology that uses database mechanisms to record transactions in a decentralized public ledger. Proponents of blockchain describe it as a next-generation technology that can be used to optimize all aspects of human life, from financial services and healthcare to supply chain and identity management. According to research firm Gartner, the business value added by blockchain will increase to over $3 trillion by 2030 – a pie the Nigerian government now hopes to plug its economy into.

Crypto is still not welcome

For the Nigerian government, approving a national blockchain policy does not mean accepting cryptocurrency (which remains the most prominent use case of blockchain). In July 2021, the CBN banned banks from facilitating cryptocurrency transactions and asked banks to “close the accounts of persons or entities involved in cryptocurrency transactions.” The bank cited terrorism financing and money laundering as its main reasons for the action, and claimed it was protecting Nigerians from the risks of crypto adoption.

Meanwhile, the draft national blockchain policy reveals that the Nigerian government remains crypto-averse as it seeks to develop a regulatory framework for other blockchain use cases. “Blockchain technology undoubtedly has great potential for the development of Nigeria’s digital economy. Much of the focus has been on cryptocurrencies, particularly bitcoin. However, there is much more that blockchain can do for the economy and this strategy document aims to redirect the focus to other areas”, the draft says in part.

Christian Duffus, founder and CEO of blockchain startup Fonbnk, 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 generally against blockchain technologies, especially after the publication of the crypto ban. . “The blockchain policy is an important move by the government to accommodate blockchain innovation in the country. After the ban on crypto, they cannot afford to be seen as a government associating illegalities with blockchain operators. Interestingly, this policy also provides a framework for eNaira, the blockchain powered digital currency issued by the CBN,” he said.

Oluwatobiloba Ajayi, blockchain expert and founder of B2B crypto startup Ivory Pay, remains unfazed by the exclusion of crypto from the national blockchain policy. “Crypto is taking significant control and oversight of finances outside of 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 overall goal of the policy is to create a blockchain-powered economy that supports secure transactions, data sharing and value exchange between people, businesses and governments. The policy practically serves as a government-led approach to the adoption of blockchain technology in Nigeria. While the next steps in the implementation process remain unclear, the fact remains that through this policy, the Nigerian government is announcing itself as a partner for blockchain-related innovation in the country.

Nnamdi Uba, CEO of HouseAfrica, a startup leveraging blockchain to resolve property rights in Africa, spoke to TechCabal about the national blockchain policy. “I am one of the people who have been working on the political project for the last 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 embed the use of blockchain in government processes, and then roll it out to the masses.”

“However, we must 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 tokenization of real estate, supply chain tracking, and authentication of documents. We will also see more interesting use cases coming 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 strategy framework include the promotion of blockchain business incentive programs and the establishment of a national blockchain sandbox for proof of concepts and pilot implementation. These ambitions from the government convey a friendly regulatory framework for blockchain startups in the country.

“Historically, we’ve seen government policies work against tech start-ups – as was the case with Lagos’ driving ban. This is one time we’re seeing the government roll out a policy that incentivizes developers and investors in this niche. It’s a big deal, but “For it to work, the government needs to be at the forefront. They need to drive the implementation and integrate the technology into their own systems,” Ajayi said.