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Nigeria wants to power its ‘new’ digital economy using blockchain

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Nigerian waving flag

Nigeria wants to become Africa’s digital economy capital by 2023,  according to the country’s Minister of Communication and Digital Economy, Dr. Isa Ali Pantami. The government of Nigeria disclosed its plans of transitioning the country into a new, effective digital economy through the adoption of the distributed ledger, blockchain technology. This was confirmed in a recently released draft from the National Information Technology Development Agency (NITDA) titled “National Blockchain Adoption Strategy”. 

The document contains a roadmap for the country’s general adoption of digital technologies, particularly the blockchain network which would be used in facilitating crypto trades across the country and ultimately bring the country into the long awaited digital economy.

The Nigerian government had earlier voiced skepticisms concerning the appeal of digital currencies and the underlying blockchain technology and have attempted to place a ban on it. 

Over the years, the country’s SEC and other financial regulatory bodies, have constantly warned citizens about the inherent risks of investing in digital assets. At some point, digital currencies were declared as non-legal tender. 

However, the country began to experience a gradual change in stance from the government and financial regulators. In 2019, Nigeria saw a varying degree of acceptance in the aspect of digital technologies and assets, some of which include the fintech report. This report comprises recommendations with respect to digital currency. Closely followed by this, came a call for a legal framework to regulate the use of digital assets. This led to the creation of a committee which is aimed at setting up a proper regulatory framework for digital assets. 

In September 2020, regulators demonstrated a bigger interest in legislating the crypto space. This was confirmed in an SEC statement that was released. The statement documents outlines on how crypto assets would be regulated based on how they are classified. 

The national blockchain adoption strategy.

Digital currencies have seen widespread recognition as many have realized the variety of advantages connected with its application, which cuts across operation cost reductions to the improvement in the efficiency of business processes. 

As part of an effort to move Nigeria away from its huge economic dependence on the oil and gas sector, and into a simpler economy steered by digital technologies, President Muhammadu Buhari has intensified interests in regulating the blockchain technology. The NITDA was put in place to facilitate the government’s statutory obligations towards these emerging techs, with a major role of coming up with corresponding strategies for ensuring a healthy ecosystem. 

The federal government aims to provide the trust necessary for the achievement of an efficient, safe, and most importantly, productive digital Nigeria. In light of this, the government has shown a high level of interest in creating and enforcing regulations to direct the adoption and use of digital technologies. This would ensure fair markets as well as the protection of citizens while letting innovations and businesses flourish. 

The primary objective of the Nigerian Blockchain Adoption Strategy is to identify and make good use of the opportunities provided by blockchain technology, in order to strengthen the growth of the country’s economy. 

The draft emphasized the several key areas that would be focused on. The areas include regulations, skills and capacity building, innovation, investment, collaboration, and internal competitiveness, with more emphasis on the regulatory approach which promises to be one that encourages innovation and development. 

Objectives and incentives

The proposed strategy for the adoption of blockchain, is built on the following 6 key initiatives developed from the 8 pillars of Nigeria’s Digital Economy Policy And Strategy (2020-2030)

  • Establishing the Nigerian Blockchain Consortium
  • Regulation and legal framework
  • Provision of a national Digital Identity framework
  • Creation of blockchain business incentives
  • Promoting Blockchain digital literacy and awareness
  • Establishment of a National blockchain sandbox. 

Also, the following 5 strategic objectives were outlined in the document.

  • Establishment of a blockchain regulatory oversight
  • Stimulating innovations and entrepreneurship
  • Building security, trust, and transparency in value chain
  • Enabling better investment opportunities and job creation
  • Governance. 

“The goal of this strategy is to key into the Economic Recovery and Growth Plan of the Federal Government by increasing the contribution of ICT to the Gross Domestic Product (GDP).”

The strategy framework aims to propel the adoption of blockchain technology in public administrations across the country, while converting the economy into a digital productive one. As a result of this, we hope to see improvement in efficiency, transparency, governance as well as new job opportunities. 

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Nigeria’s Central Bank Digital Currency e-Naira Gain Traction

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eNaira

According to Governor Godwin Emefiele, the Central Bank of Nigeria’s (CBN) digital currency, the eNaira, which was officially revealed on Monday, has garnered immense interest and a positive response from both within and beyond Nigeria, with 33 banks fully integrated on the platform. The CBN has successfully minted $500 million, with N200 million going to financial institutions, according to Emefiele, who spoke at President Buhari’s historic launch in Abuja.

In addition, over 2,000 clients have been added to the eNaira platform, and over 120 merchants have successfully enrolled. Since its launch, the eNaira website has had approximately 2.5 million daily views. Customers who download the eNaira Speed Wallet App will be able to complete the onboarding process and build their wallet, locate their eNaira wallet from their bank account, transfer eNaira from one wallet to another, and make payments at registered merchant locations.

In terms of maintaining a robust payment system, the Central Bank of Nigeria (CBN) feels that the eNaira will make a big difference to Nigeria and Nigerians. The eNaira will also lower the cost of processing currency, allowing for more direct and transparent welfare interventions for citizens, as well as increased revenue and tax collection, easier diaspora remittances, lower the cost of financial transactions, and improved payment efficiency.

Governor Godwin Emefiele outlined these advantages during the historic debut in Abuja, saying that Nigeria’s Central Bank Digital Currency (CBDC) is the first in Africa and a digital version of the actual Naira. 

What is eNaira?

The eNaira is the same Naira with considerably more possibilities, Emefiele asserted emphatically, guaranteeing that the new payment system is one of the most robust in the world, sufficiently safeguarded, and thus nothing to worry about.

In 2017, the Central Bank of Nigeria (CBN) began an intensive study, consultations, identification of use cases, and testing of the CBDC idea in a Sandbox environment, in response to increased interest in Central Bank Digital Currency (CBDC) around the world.

The goal of the study was to provide a strong argument for the introduction of a digital currency in Nigeria so that all Nigerians can benefit from a more successful and inclusive economy.

Following the completion of preliminary research, the CBN’s researchers and experts were able to clearly establish that a digital currency will promote a more paperless, inclusive, and digital economy, complementing the successes of prior policy initiatives and our rapidly increasing payment systems.

As a result, the CBN decided to create its own CBDC, dubbed the eNaira. Like the physical Naira – eNaira is a legal tender in Nigeria and a liability of the CBN, which will have the same value and always be exchanged at 1 naira to 1 eNaira

To reduce the risk of the process, the CBN has carefully considered the entire payments and financial architecture, and has structured the eNaira to complement and improve these ecosystems, as well as implementing security protections and policies to ensure the financial system’s integrity.

To maintain the integrity and stability of Nigeria’s payment system, strict adherence to anti-money laundering and counter-terrorist financing regulations would be enforced, according to Emefiele.

The eNaira, like other digital revolutions, is a journey, and Nigerians should expect more features in the coming months. Accessibility and onboarding of consumers without BVN, as well as the usage of the eNaria on the phone without access to the internet, are among them. 

Nigeria will be one of the first countries in the world to implement the CBDC using USSD on phones, bypassing the need for internet access. The CBN also plans to use the eNaira platform to onboard revenue collection agencies in order to increase and simplify collections, as well as to create sector-specific tokens to support the Federal Government’s social programs and distribution of targeted welfare schemes in order to lift millions of people out of poverty by 2025.

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Jack Dorsey‘s Square to develop open source Bitcoin mining

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Jack Dorsey Bitcoin

On Friday, October 15, Twitter CEO Jack Dorsey announced that American fintech company, Square, would be looking to get into Bitcoin mining. Jack Dorsey who is also Square’s CEO announced this on Twitter which subsequently sent waves through the bitcoin market, surging its price to almost a record high, rising over $62,000 over the weekend. According to the Twitter boss, Square is looking to building an open source Bitcoin mining system that would be available to individuals and businesses.

Sharing his thoughts further on the initiative, he stated that “Mining needs to be more distributed” and that “the more decentralized [mining] is, the more resilient the Bitcoin network becomes. He also mentioned the apparent inaccessibility of mining stating that “Bitcoin mining should be as easy as plugging a rig into a power source.

Dorsey also believes that bitcoin mining “needs to be more efficient and that “clean and efficient energy use” would be undoubtedly beneficial to the digital currency in the long run.

Dorsey ended the thread by saying that a “technical investigation would be undertaken by a Square team led by Jesse Dorogusker, Square’s hardware lead. If successful, this initiative would be another of Square’s bitcoin focused projects which includes a Bitcoin hardware wallet.

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Financial Leaders from G7 Release Guidelines for Central Bank Digital Currency

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Source: World Atlas

At a meeting that was held in Washington, yesterday, October 13, G7 leaders discussed central bank digital currency and endorsed 13 public policy principles with regards to their implementation. The financial leaders from G7 agreed that CBDCs would complement cash and should not be detrimental to the monetary system. The G7 leaders have been discussing CBDCs this week concluding that they should do no harm and meet rigorous standards.

It should be noted that G7 includes finance leaders in advanced economic nations comprising of Canada, France, Germany, Italy, Japan, the U.S and the U.K. the G7 leaders make it mandatory that any newly launched CBDC should not harm the central bank’s ability to perform its duty of maintaining financial stability. In a joint statement by the G7 finance ministers and central bankers, they said that, 

“Strong international coordination and cooperation on these issues help to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.” 

The joint statement further states that CBDCs are complements to cash and could serve as a liquid or safe settlement assets with an added advantage of anchoring existing payment systems. CBDCs issuance should be entrenched in a long-standing public commitment to transparency, rule of law, and sound economic governance. The statement added at CBDCs must be so efficient that they are fully interoperable on a cross-border basis. 

The G7 leaders agreed that they had a duty to minimize the incidence of ‘harmful spillovers to the international monetary and financial system” 

The G7 statement reiterated a similar statement earlier made by G20 that no global stablecoin project should begin operation until such a token has addressed legal, regulatory and oversight requirements. 

Countries like China and Nigeria are ahead of the pack with regards to the adoption of digital Yuan and Naira respectively. China’s crackdown on cryptocurrency may be a step forward for the country’s plan to promote its digital Yuan. Nigeria, on the other hand, postponed the launch of its eNaira in deference to the 61st anniversary of Nigerian independence on Oct 1. 

However, countries like the US and the UK are dragging their foot with regards to the introduction of CBDCs to their financial system. There are insinuations that America is in danger of being left behind technologically and financially if it doesn’t get serious with the implementation of CBDC in its financial system.

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