Nigeria’s Blockchain Policy: All Growth, No Crypto

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With its latest national blockchain policy, Nigeria appears to be banking on blockchain technology. But the West African nation does not seem to welcome crypto politics anytime soon.

On May 3, the Federal Ministry of Communications and Digital Economy (FMCDE) announced the approval of a National Blockchain Policy. Essentially, this means that the government is supporting emerging technology which it hopes can facilitate the development of Nigeria’s digital economy and enable citizens to have more confidence in digital platforms.

The move was hailed as a game-changer and reflecting the government’s pro-tech stance. However, several industry watchers are raising questions regarding the implementation and asking a crucial 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. Blockchain proponents describe it as a next-generation technology that can be applied to optimize all facets of human life, ranging from financial services and healthcare to supply chain and identity management. . According to research firm Gartner, the business value added by blockchain will grow to over $3 trillion by 2030, a pie the Nigerian government now hopes to plug the economy into.

Crypto is still not welcome

For the Nigerian government, endorsing a national blockchain policy is not tantamount to accepting cryptocurrency (which remains the most important use case for blockchain). In July 2021, the CBN banned banks from facilitating crypto transactions and required banks to close the accounts of individuals or entities involved in crypto transactions. The bank cited terrorist financing and money laundering as the main reasons for the action, saying it was protecting Nigerians from the risks of crypto adoption.

Meanwhile, the draft National Blockchain Policy reveals that the Nigerian government is still opposed to crypto as it seeks to develop a regulatory framework for other blockchain use cases. Blockchain technology undoubtedly holds great potential for the development of Nigeria’s digital economy. Much of the attention has been focused on cryptocurrencies, especially bitcoin. However, blockchain can do much more for the economy and this strategy paper aims to redirect attention to other areas, the draft reads in part.

Christian Duffus, founder and CEO of blockchain startup Fonbnk, explained to TechCabal that blockchain policy could be a reactionary move by the government to send a clear signal that it is not globally against blockchain technologies, especially after the publicity of his crypto ban. The blockchain policy is an important decision by the government to accommodate blockchain innovation in the country. After the crypto ban, they can no longer 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 said.

Blockchain expert and founder of B2B crypto startup Ivory Pay, Oluwatobiloba Ajayi, remains unfazed by the exclusion of crypto from national blockchain policy. Crypto is significantly taking control and oversight of finances away from the scrutiny of governments. 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 the FMCDE, the overarching goal of the policy is to create a blockchain-powered economy that supports secure transactions, data sharing, and value exchange between people, businesses, and government. The policy practically serves as a government-led approach for 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 shaping itself as a collaborator for blockchain-related innovation in the country.

Nnamdi Uba, CEO of HouseAfrica, a startup that leverages blockchain to solve land title ownership in Africa, spoke effusively to TechCabal about the national blockchain policy. I am one of the people who have been working on this political project for three years, he revealed. We want to unleash 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. My real estate company, for example, is powered by blockchain, but we don’t use crypto. Blockchain can help in many ways, including property tokenization, supply chain tracking, and document authentication. We will also see more interesting use cases in the future. As you know, the new administration has also promised to focus on blockchain technology, he shared.

Some initiatives outlined in the strategic policy framework include promoting blockchain business incentive programs and creating a national blockchain sandbox for proof of concept and pilot implementation. These government ambitions translate to a friendly regulatory framework for blockchain startups in the country.

Historically, we have seen government policies go against tech startups, as was the case in Lagos, banning carpooling. It’s once we see the government roll out a policy that incentivizes builders and investors into this niche, that’s a big deal, but for it to work, the government has to be at the forefront. They need to drive its implementation and integrate the technology into their own systems, Ajayi said.

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