Tinubu’s plan for Blockchain and eNaira is appealing despite the lack of details
President-elect Bola Tinubu mentioned in his manifesto that he has plans aimed at encouraging the use of blockchain technology and cryptocurrencies in Nigeria’s finance and banking sector.
The guidelines are intended to promote the prudent use of these technologies to improve identity management, revenue collection and use of crypto-assets.
As part of the policy, the government has will establish an advisory committee to review the existing regulatory environment governing blockchain technology and virtual asset services.
The committee will be given a task with proposing changes to create a more efficient and business-friendly regulatory framework, where necessary. The government hopes that this will help attract more investment in the sector and stimulate economic growth.
In addition, the government plans to encourage the Central Bank of Nigeria (CBN) to expand the use of the country’s digital currency, E-Naira. This move is part of a wider effort to promote financial inclusion and create a more accessible and efficient payment system in the country.
He also believes that the policy will help position the country as a leader in the blockchain and cryptocurrency industry, creating new opportunities for businesses and entrepreneurs in the sector.
See excerpt
“We will reform government policy to encourage the judicious use of blockchain technology in finance and banking, identity management, revenue collection and the use of crypto assets. As part of our reforms, we will establish an advisory committee to review the existing regulatory environment governing blockchain technology and virtual asset services and, where necessary, propose changes to create a more efficient and business-friendly regulatory framework. We will also encourage the CBN to expand the use of our digital currency, Enaira.”
What this means
The policy to encourage the use of blockchain technology and cryptocurrencies, as outlined in the extract, is related to the new Nigerian Digital Assets Regulation, which was introduced by the Nigerian Securities and Exchange Commission (SEC) in 2021.
The new regulation provides a framework for the regulation of digital assets, including cryptocurrencies and other digital tokens, in Nigeria. The regulation requires digital assets to be registered with the SEC and mandates that all offers and investments of digital assets must comply with SEC regulations.
The manifesto proposes that a review of the existing SEC regulation on digital assets will be conducted with the aim of making it more business-friendly. Several cryptocurrency enthusiasts criticized the regulation for lacking enough provisions to support the adoption of economically important use cases.
It is also noteworthy that the manifesto is in line with the central bank’s eNaira initiative which has not lived up to expectations. In fact, their plan is to expand the use of eNaira.
We need more details
One potential challenge is the lack of clarity on how the government plans to encourage the use of blockchain technology and cryptocurrencies.
The manifesto mentions the creation of an advisory committee to review the regulatory environment and propose changes, but it does not provide concrete details about what these changes might entail or how they will be implemented.
In addition, the excerpt does not address concerns about the risks associated with cryptocurrencies, such as volatility, lack of regulation, and potential for fraud.
Another challenge is the potential for the policy to reinforce existing inequalities in access to financial services. While the policy may increase economic inclusion for some people, it may also exclude those who do not have access to the necessary technology or infrastructure.
In addition, the policy may benefit larger companies and investors at the expense of smaller businesses and individuals, who may not have the resources to invest in these technologies.
A third challenge is the lack of clarity surrounding the government’s plan to expand the use of E-Naira. The excerpt does not provide specific details about how the digital currency will be introduced, how it will be used, or what advantages it will offer over traditional currency. This lack of clarity can create uncertainty and hinder the introduction of E-Naira.
While we await further details on their blockchain-related policy, the use of cryptocurrencies and blockchain technology is still a relatively new and untested area in many countries, and security, regulatory and fraud concerns are likely to be an issue. Although Nigeria is considered a major adopter of cryptocurrency globally, government officials lack the understanding and application of blockchain technology in a modern economy.
