Is Nigeria prepared to go the long haul, surmount the challenges and adopt blockchain technology? EHIME ALEX hazards an explanation
The Nigerian government is beginning to show stronger interest in the use of blockchain to boost its economy, as the technology could be bedrock of economic growth and innovation.
The latest call to action was a two-day workshop organised by the Nigerian Communications Commission, in collaboration with the Bureau of Public Service Reforms. Themed ‘Distributed Ledger Technology (Blockchain) Ecosystem, Decentralisation and Adoption Methods’, the forum focused on the essentials of blockchain technology.
According to NCC, existing national digital economy frameworks such as the National Digital Economy Policy and Strategy (2020-2030) instituted by the Federal Government of Nigeria, as well as its regulatory initiatives, have been significant enablers of blockchain and emerging technologies in the country.
“Good regulatory policies are the bedrock of innovation and growth,” NCC’s Director, New Media and Information Security, Dr Haru Al-Hassan, said.
The Director-General of BPSR, Dr Dasuki Arabi, added that blockchain would be central in the implementation of the National e-Government Masterplan.
According to Al-Hassan, it is the aspiration of the NCC that the Distributed Ledger Technologies, known as blockchain and other innovative technologies and services, thrive and contribute to the development of Nigeria.
Arabi even stressed that the introduction of the Treasury Single Account, Integrated Payroll and Personnel Information System, Bank Verification Number, automation of enforcement activities of some agencies of the government, including the Federal Road Safety Corps as well as automated performance measurement systems for public sector employees, are concrete examples of the utilisation of technology in the public sector.
Clearly described, blockchain is the underlying technology used for Bitcoin and other crypto currencies. A peer-to-peer electronic cash system, it offers much more than crypto currencies, which Nigeria has already outlawed.
It has developed over the last decade into one of today’s biggest groundbreaking technologies with potential to impact every industry from financial to manufacturing and educational institutions.
The Republic of Malta, a southern European island country, located in the south-central region of the Mediterranean Sea, has incorporated the technology into its digital and economic ecosystem. China, Abu Dhabi and Japan are also known to be instituting DLT-friendly regulations in their governance processes.
Blockchain provided the answer to digital trust because it records important information in a public space and doesn’t allow anyone to remove it. It is transparent, time-stamped and decentralised, said the World Bank in an article on the potential of blockchain technology to transform government. It added that the key to unlocking the transformative power of blockchain and distributed ledgers in digital government “is not simply a matter of technology but also involves human and institutional factors.”
The inventors of blockchain did not start by thinking about how the technology could improve transaction or information processing efficiency; instead, they considered a very human concern: trust, said the Bretton Woods institution.
“Improving trust is, in fact, blockchain’s superpower and its relative advantage over other tools and technologies used in transaction and information processing,” it added.
The bank further maintained that realising the potential of blockchain technology in public sector digital transformation requires a framework for technology design and implementation that begins by thinking first about areas where improvement of social trust is needed.
A speaker at the workshop, Dr Abdul-Kareem Oloyede, was concerned that Nigeria does not have a clear-cut blockchain policy yet, even as some countries have begun to adopt DLT as a central part of their business practices.
The University of Ilorin, Kwara State, lecturer, however, expressed optimism that the DLTs could be utilised to minimise expenditure, speed up transactions and improve data security for financial institutions, health care and businesses.
Some of the challenges that could hamper the adoption of blockchain technology include poor infrastructure, lack of human resources and capital, political forces and skill development. Interswitch, an integrated digital payment and e-commerce company, highlighted this in a whitepaper unveiled in October 2021 on blockchain technology entitled ‘Blockchain Technology: The Future of Africa’s Digital Economy’.
“But even more, technical, regulatory and institutional challenges are major aspects crippling the acceptance of blockchain by businesses and individuals in Africa,” it stressed.
At the 2019 e-Nigeria Conference, Exhibition and Awards, President Muhammadu Buhari stated that, in the public service, the digitisation of key activities such as the use of the BVN, TSA and IPPIS enabled the country to save cost and fight corruption.
Foreseeability of DLT
The blockchain marketplace is expected to grow largely from $4.9bn in 2021 to $67.4bn by 2026, representing a Compound Annual Growth rate of 68.4 per cent during the forecast period, according to MarketsandMarkets, a revenue impact and advisory firm.
Statista sets global spending on blockchain solutions to reach around $19bn by 2024, with more businesses leveraging the technology across data validation, data access and identity protection strategies.
The PricewaterhouseCoopers ‘Time for Trust’ report on blockchain and the evolving market says the technology could improve global Gross Domestic Product by an average of $1.76tn by 2030, which, according to economists, represents 1.4 per cent of the global GDP at present.
Gartner analysts suggest that business value generated by blockchain will grow to around $176bn by 2025, then to $3.1tn by 2030. However, while adoption of blockchain technology grows rapidly around the world, experts predict there are significant areas of regulations, which need to be modified to allow the technology go mainstream.
The Managing Director of Cloudflex Computing Services, Remi Adejumo, told Financial Street that blockchain gives reassurance as well as additional security for public facing applications of cloud, asserting that the number one issue of adoption and widespread trust is the security of this public asset.
“Cloud is important for the growth of any economy,” he said.
The cloud saves money, about 70 per cent on Total Cost of Ownership, a formula from cloud economics used to calculate all costs and benefits related to a cloud computing project and to determine the true, all-in costs, which then can be compared to alternatives.
Adejumo noted other benefits of cloud to include speed of deployment, agility to change and resize, contribution to the economy and employment to the tech sector.
Unhealthy use of the foreign cloud rather than local cloud, non-adherence to the Nigeria Data Protection Regulation, data localisation not being enforced by the regulators – Central Bank of Nigeria, National Pension Commission, National Insurance Commission – underdevelopment of the tech workforce, lack of incentive to the development of local cloud, were some of the challenges, Adejumo highlighted.
While Africa can benefit from blockchain technology to facilitate cross-border transactions, the Agriculture Sector Coordinator at the Secretariat of the National Action Committee of African Continental Free Trade Area in Abuja, Dr Olusola Oloba, disclosed to Financial Street that a platform called the Pan-African Payment and Settlement System is already being used to pay for goods and services traded under AfCFTA.
“It is meant to eliminate the problems and cumbersome process of third party currency such as the United States dollar. It was launched early this year and is now running,” added Oloba.
According to him, at the domestic level, several fintech companies are being on-boarded in the NAC-AfCFTA current initiative, called the eCommerce Development Initiative.
“It is meant to develop the capacity of the major players in the fintech and e-commerce space to take full advantage of the AfCFTA agreement given that the Nigerian fintech sector is the fastest growing in Africa,” Oloba said.
Get real time update about this post categories directly on your device, subscribe now.