A Review of Nigeria’s National Blockchain Policy

Introduction

Nigeria has displayed a growing interest in blockchain technology and cryptocurrencies, recognising their potential benefits in areas such as financial inclusion, transparency, and corruption reduction. The adoption of cryptocurrencies, with Bitcoin as the most popular, has been increasing in the country. Furthermore, blockchain technology has gained attention across various sectors beyond finance, including supply chain management, healthcare, and energy.

In Nigeria, the utilization of blockchain technology serves various objectives such as enhancing security, reducing costs, and increasing transparency. As this technology continues to evolve, developing countries like Nigeria have embraced it and taken steps towards its implementation.

The Federal Government of Nigeria approved the National Blockchain Policy in May of 2023, as part of the National Digital Economy Policy and Strategy.

The Policy aims to enhance the quality of services provided by both public and private sectors, stimulate innovation, generate employment, and improve governance, contributing to economic growth. It aligns with Pillar 7 of the National Digital Economy Policy and Strategy (NDEPS), which focuses on Digital Society and Emerging Technologies. This connection links the development of the digital economy to the well-being of Nigerian citizens.

Its Benefits

There are some critical aspects of the Blockchain that remains useful and speaks to certain challenges in Nigeria.

• Trust and Transparency: Blockchain can make transactions and information more transparent and trustworthy by creating a record that can be seen and verified by anyone with permission. Such technology can improve the transparency and disclosure of procurement processes, reduce intermediaries and paperwork, and enable audits and feedback mechanisms. On asset registry, it brings about transparency and helps with the verification and ownership of valuable assets, such as land, property, or vehicles.
• Supply chain management: This helps prevent or reduce the circulation of counterfeit drugs and goods by implementing various measures to ensure the authenticity, quality, and safety of products throughout the supply chain
• Identity management: Many people in developing countries lack official identity documents or face challenges in proving their identity due to various factors, such as poverty, displacement, discrimination, or weak institutions. This can exclude them from participating in the formal economy and society, and expose them to risks of fraud, exploitation, or human rights violations. Blockchain can address some of these challenges through securitization, decentralization, and verifiability.

However, blockchain also has some limitations and challenges for fighting corruption, such as:

• Privacy and security: Blockchain can expose sensitive or personal data to unauthorized access or misuse or create vulnerabilities to cyberattacks or technical failures. Blockchain users and stakeholders need to ensure that data is encrypted, anonymized, and protected by appropriate permissions.
• Complexity and uncertainty: Blockchain can require new skills, knowledge, and infrastructure to use and understand it, or create conflicts with existing laws or norms. Blockchain users and stakeholders need to ensure that they have adequate technological know-how, legal frameworks, and social structures.
• Inequality and exclusion: Blockchain can create digital divides or power imbalances among users and stakeholders, or limit access to information or participation for some groups. Blockchain users and stakeholders need to ensure that they have inclusive and participatory governance models

Implementation

The implementation of this policy will require close partnerships between stakeholders, government agencies, regulatory bodies, and private sector organisations.

The policy highlights a National Blockchain Implementation and Steering Committee for implementation. Such a committee will have representatives from stakeholders in the digital ecosystem ranging from government ministries and agencies, Universities, Fintech companies, Financial Associations, Stakeholders of the Blockchain Technology Association of Nigeria, and a host of other stakeholders.

While the project seems promising, there needs to be a clear roadmap for implementation. For instance, Talent development, a pillar of the policy document, states the need to develop programmes tailored to meet the needs of the industry through workshops, training, and certification programmes. This approach is faulty and haphazard and not sustainable. A more sustainable approach will be to develop curriculums for tertiary institutions and attract expertise in the space of transferring knowledge.

Another pillar, Blockchain adoption, speaks to financial inclusion which means having access to formal financial products and services. But this incessant quest does not mean that the almost 64 million people who currently lack access can use them well or benefit from other opportunities in the economy. So long as people remain trapped in a cycle of poverty and low productivity.

How many people are now “financially included” yet are still “economically excluded?” What good does it really do for someone to have access to a bank account or credit even if their basic means of making a living have not changed? Such projects do not translate into any economic gains for the target groups. Economic inclusion, it entails providing tailored financial services, supporting entrepreneurship and innovation, investing in human capital development, and promoting social protection and safety nets. More insights on how economic inclusion translates to the adoption of financial products and services for inclusion can be obtained here .

On policy coordination, it will be critical to see how the proposed Data Protection Bill will accommodate modern technologies such as this and the agencies that will interface with consumer protection/rights (FCCPC) and data protection (NDPB). To ensure that businesses and individuals utilizing blockchain technology are held accountable for their activities and that consumer rights are safeguarded, it is crucial to set clear norms for their use. Proper synchronized regulations by the various agencies charged with such responsibility will safeguard consumers’ assets and foster innovation.

Lastly, such technologies require significant amounts of energy consumption to run. Nigeria, like many other developing nations, has problems with power generation, transmission, and distribution. Therefore, the need for a more robust effort by the government towards power generation and distribution. However, the energy required to run a blockchain network in Nigeria would depend on the particular use cases and applications for which the technology is used. The Federal Government would need to carefully weigh the energy needs for operating blockchain networks while taking into consideration the country’s energy status.

Endnotes

The move by the Nigerian government to authorise the National Blockchain Policy is a commendable step towards the utilisation of technology and creativity to promote economic growth and improve security. The implementation of the policy could change several economic sectors and enhance Nigerians’ quality of life.

The Policy will be a critical tool in realizing the full potential of Blockchain Technology in Nigeria if properly examined for implementation.