By Collins Nweze
Little research by Enhancing Financial Innovation & Access (EFInA) has shown that blockchain technology can add $ 29 billion to Nigeria’s gross domestic product (GDP) by 2030 and promote financial inclusion.
The report, titled “Blockchain Potential for Financial Inclusion in Nigeria,” describes the potential of blockchain to boost financial inclusion and illustrates potential use cases for blockchain technology in Nigeria.
Fostering financial inclusion in Nigeria has been highlighted by the Central Bank of Nigeria (CBN) as a key objective. However, EFInA’s 2020 Survey on Access to Financial Services in Nigeria highlighted that financial inclusion in Nigeria stands at 64%, below the national financial inclusion strategy to reach 80% of financial inclusion. financial inclusion by 2020.
The EFInA blockchain study highlights that blockchain-based solutions can support progress towards Nigeria’s financial inclusion goals and address some of the key challenges related to financial inclusion, such as lack of formal identity, high transaction costs and lack of transparency.
EFInA said that achieving this would require building trust in businesses, government transactions and processes. EFInA has identified four key use cases for blockchain technology in Nigeria – enabling identity management, payments, access to finance, as well as title granting and registration – outside of crypto -currency, which is a major application of blockchain technology and a recurring topic of discussion between regulators and government entities around the world today.
Recently issued circulars by the CBN and the Securities and Exchange Commission (SEC) on cryptocurrency talk about the fact that blockchain technology is on the radar of Nigerian policymakers. Cryptocurrencies fall into different categories – speculative coins, stablecoins, and central bank digital currencies – which present varying degrees of risk and opportunity.
The Central Bank of Nigeria recently announced its intention to launch a central bank digital currency, which has the potential to support government intervention programs for people living in underserved areas and enable efficient remittances. cross-border funds.
To ensure that the potential of cryptocurrency and blockchain technology is realized in Nigeria, a collaborative effort among multiple stakeholder groups is essential – regulators, financial service providers, development institutions and donors / organizations. financial sector development.
These stakeholder groups need to find ways to communicate and collaborate to drive policies conducive to innovation and ensure that we take a balanced approach to risk in the implementation of emerging technologies in Nigeria.
Other countries have leveraged public-private partnerships and embraced blockchain technology to drive inclusion and efficiency in their financial systems. For example, the South African Reserve Bank, in collaboration with ConsenSys (a fintech) and the national banking community, leveraged blockchain to reduce transaction processing time by 75% while increasing trust, confidentiality and the scalability of their financial system.
The Nigerian financial ecosystem must learn lessons from other climates and find ways to apply them locally to improve the way we deal with each other and enable the inclusion of Nigeria’s most vulnerable groups.