Nigeria's outgoing president Muhammadu Buhari has recently approved a national policy on blockchain technology. The policy is purportedly anchored on the country’s readiness to domesticate the new technology in an effort to grow its digital economy.
However, the prevailing ban on cryptocurrency is overshadowing its prospects and putting it to the test.
The National Information Technology Development Agency (NITDA), a parastatal of the country's Ministry of Communication and Digital Economy, was majorly behind the move to win the outgoing government’s approval for a policy that is apparently seeking to make Nigeria a leading blockchain hub in Africa.
The recent approval , therefore,presents an opportune time to examine the West African country’s ban on cryptocurrencies and the feasibility of blockchain adoption.
The Ban On Cryptocurrency
In 2021, the Central Bank of Nigeria, issued a directive to all commercial banks across the country, asking them to refrain from facilitating all crypto-related transactions. This was the first major blow to cryptocurrency which was not only meant to villianise it but to also suck out its growing popularity as a digital medium of exchange in the country.
The consequence of the ban came too quickly. According to John Mc Keown, the most immediate impact of the crypto ban, was companies like Boundless Pay and Patricia leaving Nigeria for crypto-friendly countries.
The existing ban on cryptocurrency and the launching of CBDC have been Nigeria's combative measures against the growing influence of cryptocurrency. Although both the ban on crypto and the aggressive promotion of the country's CBDC have failed to yield the desired result, they seem to have canceled cryptocurrency effectively by calling it a bad name in order to kill it.
Like in most countries, Nigeria's ban on cryptocurrency is a failed attempt to stop cryptocurrency at the source.
The indubitable proof of its failure is the fact that, despite the ban, Nigeria went on to become one of the countries with the highest number of Bitcoin traders in the world—much to the vast astonishment of the policymakers.
But what has suddenly changed?
This is the question on my lips. I can imagine a plethora of crypto-savvy Nigerians asking the same question . It’s only appropriate to ask why the outgoing government approved a policy recognizing blockchain technology when the ban on cryptocurrency, its most popular and exclusive use case, is still effective.
Can Nigeria outshine countries like China, the USA, and the EU in the implementation of this new technology?
How does one expect a technology of this magnitude to thrive at different levels of government in a country where innovation hardly thrives?
Is it premature?
The national policy on blockchain can be said to be premature at best. The current political dispensation having failed to live up to the country’s expectation of a smooth and steady technological development in the last eight years of its rulership means that it is invariably the norm for the government of the day to pay lip service to matters of technology and innovation.
In Nigeria, most politicians are more concerned about winning elections than improving the lives of the ordinary citizens through ambitious developmental projects.
Is there a Sincerity of Purpose?
The policy can also be condemned as lacking a sincerity of purpose not only because its implementation strategy is too good to be true but also for its failure to accord cryptocurrency the attention that it apparently deserves. It beggars the question as to why the SEC, Nigeria’s regulatory agency , has yet to issue a statement regarding the approval of the policy.
If there was any sincerity of purpose, the policy makers could have followed the UK example in their approach. When it comes to blockchain adoption,the UK has what I describe as the most flexible and balanced approach–one that does not necessarily call a dog a bad name in order to kill it.
This is true of the UK in the way the Financial Conduct Authority(FCA), the country’s crypto-regulating agency,is able to strike a balance between crypto regulation and blockchain innovation through healthy regulatory practices that have allowed leading crypto exchanges like Kraken, Coinbase, and Bitstamp to remain in business.
In the UK cryptocurrency is legal and classified as financial service but why is it blindly banned and villianised in Nigeria? What is the point to approving a blockchain policy when cryptocurrency , which is one of the key drivers of its adoption, remains banned?
It turned out sadly that the entire process that saw the exclusion of cryptocurrency was a cherry-picking, which mostly involved turning away from crypto and evangelising the potential use cases for blockchain in other key areas of the economy.
While this move is not totally condemn able, it beggars the question as to whether or not Nigeria has capacity to fully deploy blockchain technology in those areas or sectors that are still largely in their theoretical form and have no practical implications —at least for now!
Can Nigeria Spur Blockchain Revolution in Africa?
If the Nigerian policymakers, for example, can borrow a chapter from Switzerland where Uport is facilitating blockchain-based voter registration, they can leverage blockchain's potential to combat fraudulent voter registration that has continued to undermine its democracy.
But the outcome of Nigeria'sits recent presidential election has clearly shown that the most powerful technology does not stand a chance—--at least for now!
Although the recent policy document tried to sell Nigeria to the world as a nation that prioritizes the incubation of emerging technologies, the reality is that it currently lacks the ambition to outgrow its competence and mediocrity.
As Africa's biggest growth market, the country has the potential to tap into blockchain to accelerate its digital economy.
But any policy purporting to incubate blockchain technology must address the pain points that arise from its implementation.
In other words, the willingness to leverage blockchain technology is never enough. It must be followed by the capability to tackle the challenges facing its implementation.
Does Nigeria have the ability to domesticate blockchain technology without first undergoing a massive cultural transformation? How many more ambitious technological projects will die on arrival?
How then can anyone convince me that a technology that can upend our ‘normals’ can actually work in a country where doing things the old conservative way is very much the norm?
Is Adoption Good News?
When it comes to blockchain adoption, we see a mixture of good and bad news. The good news is that blockchain technology, unlike other emerging technologies like AI and robotics, is cost-effective.
No single nation needs to expend billions of dollars to create a blockchain industry as its entry barriers are extremely low.
On the other hand, the bad news is that blockchain faces several implementation challenges such as scalability, interoperability, value shifts,regulation barriers and the lack of awareness.
Unless these issues are resolved, blockchain technology will remain viable only on paper and will have no real use case outside of cryptocurrency.
Conclusion
While the policy is commendable in part, its failure is that the policymakers refused, by design, to take cognizance of cryptocurrency, which is, today, the most widely recognized use case for blockchain.
It is not to be assumed that the move to join the league of progressive nations gravitating towards blockchain is wrong.
The problem with this is that it's so premature as blockchain use cases in other areas (outside of cryptocurrency) are in their infancy or have not gained a viable or recognizable status across the world.