After many years of trying to shoo Nigerian investors off cryptocurrencies, authorities are turning to Blockchain the technology that powers them. The interesting part is they can now see a path to a future where the adoption and integration of blockchain in different sectors revive the struggling economy.
During a conference held in November, the National Information Technology Development Agency (NITDA) disclosed plans by the government to earn up to $6 billion from Blockchain technology by 2030.
Following the plans was a Draft National Blockchain Adoption Strategy presented by NITDA to stakeholders for review after the conference.
Kashifu Inuwa Abdullahi, Director-General of NITDA said adopting blockchain has become expedient because “As a country, we do not want to be left behind as we want to benefit from the estimated $1.76 trillion technology, which is why the stakeholders engagement is necessary to brainstorm on the way forward.”
A PricewaterhouseCoopers (PwC) report in October expects blockchain applications to boost global domestic product (GDP) by $1.76 trillion, (1.4% of global GDP) by 2030.
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PwC economists forecast a tipping point in 2025 if blockchain technologies are adopted at scale across the world, and expect blockchain applications to boost global gross domestic product (GDP) by $1.76 trillion, (1.4% of global GDP) by 2030.
NITDA is not the first government agency to pick interest in blockchain. The Nigerian Security and Exchange Commission (SEC) had in September released a regulatory document in which it said all crypto assets will fall under the regulation that covers securities exchanges and transactions on exchanges.
“SEC’s statement is about its regulatory approach to digital assets in Nigeria. There, SEC classified digital assets into crypto-assets (such as bitcoin, Ethereum, and other cryptocurrencies); utility tokens; security tokens; and derivatives,” explained Senator Ihenyen, lead partner, at Infusion Lawyers where he heads the Blockchain Practice and secretary-general of Stakeholders in Blockchain Technology Association of Nigeria (SiBAN).
In the past, the Central Bank of Nigeria (CBN) has seized every opportunity to warn the investing public to stay away from cryptocurrencies while not committing to any future with blockchain technology.
Lucky Uwakwe, CEO of SaBi Exchange, told BusinessDay that the change from the government is in line with new realities that show that there is more to gain in terms of revenue in embracing blockchain technology, rather than opposing it. The government’s new disposition also puts it in a positive light with investors.
‘Nigeria’s digital economy push needs blockchain’
Ihenyen says the government’s interest is part of the process of transiting to a digital economy which it has recently intensified push for.
Achieving a digital economy requires efficiency, transparency, and productivity in both the public and private sectors. These are top of the qualities associated with blockchain technology, hence the government’s interest.
Ihenyen says that getting it right involves having key stakeholders recognise the immense potentials of blockchain technology across sectors and industries; adopt policies that help promote the adoption of the technology in both the public and private sectors; address or minimize risks associated with the adoption of the technology; maximize opportunities the technology affords.
It is still early days
Although a future where the Nigerian economy benefits from blockchain technology is plausible with a change of leadership imminent, it is still early days to project whether $6 billion revenue plan is achievable. Apart from having a history of not following through with plans it made, the government is big on allocating money and poorly delivering on infrastructure, particularly in energy consumption which is a major for blockchain projects. For example, its plan to achieve 35,000MW of electricity which is contained in the Vision 2020 was not achieved.
Blockchain refers to a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. When applied to the mining of cryptocurrencies, Blockchain technology requires a high amount of energy resulting in relatively high direct energy costs. In fact, some data suggest that blockchain is supported by multiple sources of power generation, although fossil fuels remain the primary source. But Uwakwe says that NITDA may not be getting involved in cryptocurrency mining.
However, for him, the biggest challenge the country faces in blockchain adoption is the lack of technical human resources in the technology. The country’s education is currently unable to power the future of blockchain. The few talents in the country who have taken on blockchain and other fourth industrial revolution technology such as artificial intelligence, machine learning, etc have had to source their training abroad from countries like India, the US among others.
“We need adequate manpower to train and to encourage the youth who are willing able to venture into this industry. For example, as I speak I am paying a particular training institute in Asia for me to learn some advanced architectural designs and implementation – this includes artificial intelligence, machine learning, and some blockchain architecture. Even if I was willing to pay for that in Nigeria I don’t even have the place I would have learnt it in Nigeria. There is a clear difference between our country being able to and those who are willing to,” Uwakwe.
Paul Ezeafulukwe, SiBAN President told BusinessDay education should also include the regulatory agencies and leaders.
“What is very needful at this point is the education of all the different stakeholders. The regulatory agencies getting the right education and the populace that will use it getting the right education. Africa needs blockchain more than the developed nations need it. They need it to Fastrack development,” Ezeafulukwe told BusinessDay.
He also recommended state support for blockchain companies and individuals. The support could be in form of digital zones where the internet can be made cheap, with high-speed capabilities, and everything they will need to build innovative products is made available.
SEC and NITDA would also need to bring along the central bank which has until now taken a precautionary stance on cryptocurrencies. Ihenyen suggests the apex bank would likely make its position public because NITDA identified the CBN as one of the critical stakeholders in Nigeria’s efforts to adopt blockchain technology.
“Hopefully, with the proposed blockchain adoption strategy, CBN will work with other stakeholders to come up with a national blockchain adoption strategy that addresses its genuine concerns while also giving the CBN the opportunity to adopt policies and regulatory approaches that do not stifle innovation,” Ihenyen said.
